Why So Different?

[silver surfer]

If you look at house price changes from late 2007 to now (Nationwide, nominal prices rather than inflation adjusted), you see big differences between regions.

For example London is up by 19%, the south-east excluding London is flat, while Wales or the North are both down 10%.

But the same bank rates and mortgage rates apply to them all, as does H2B, MMR, etc.

What's the explanation for regional differences and is the change permanent?

[thecrashingisles]

Clearly the difference is Boris.

[Venger]

If you look at house price changes from late 2007 to now (Nationwide, nominal prices rather than inflation adjusted), you see big differences between regions.

For example London is up by 19%, the south-east excluding London is flat, while Wales or the North are both down 10%.

But the same bank rates and mortgage rates apply to them all, as does H2B, MMR, etc.

What's the explanation for regional differences and is the change permanent?

There's a trend for 'denisification' to where other 'rich' people are, where shops unlikely to all close up, and away from rural area crime-rising wastelands in my view.

[silver surfer]

Clearly the difference is Boris.

Maybe Northern Ireland has an "Anti-Boris"?

[silver surfer]

There's a trend for 'denisification' to where other 'rich' people are, where shops unlikely to all close up, and away from rural area crime-rising wastelands in my view.

Instinctively I agree, but if it were true then wouldn't the South West have fallen further than the West Midlands, which I don't think is the case?

[Venger]

Instinctively I agree, but if it were true then wouldn't the South West have fallen further than the West Midlands, which I don't think is the case?

Maybe owners in the SW only just starting to get their act together, only faintly catching on to the trend, and need to accept lower prices soon.

And there's still a few mugs buyers who haven't recognised the trend, including perhaps the guy who just bought Beckingham Palace....crime-plotting was bad enough during the boom, when there was a supposed plot of kidnap which, as I remember it, centered around that large property. (I'm purely going on memory and it might be wrong).

Houses with large grounds and no neighbours to hear you scream, crumbling infrastructure... at any point a cutback in money to maintain roads and bridges, and shopping centres full of pawn-shops, charity shops and bookies....

Edited May 15, 2014 by Venger

[gimble]

If you look at house price changes from late 2007 to now (Nationwide, nominal prices rather than inflation adjusted), you see big differences between regions.

For example London is up by 19%, the south-east excluding London is flat, while Wales or the North are both down 10%.

But the same bank rates and mortgage rates apply to them all, as does H2B, MMR, etc.

What's the explanation for regional differences and is the change permanent?

London, as an economic region, is one of the only areas in the whole of Europe that is growing strongly and creating jobs = big and growing pressure on housing. Why exactly London is doing well is hotly debated, of course. As a trading centre is it the beneficiary of continuing globalisation, is it the QE money, the bailouts for the finance industries, or the lucky recipient of disproportionate government spending on infrastructure? In the last 20 years there have been many changes - crime has fallen greatly, lots of fancy restaurants have opened, the city is cleaner, transport is better - these changes have attracted the global rich to the city when before they were more inclined to live in mansions in the countryside.

[Rambo]

Prices in Reading where I am are up 20% as well, it's not just London at all and the stock is not what you would call to die for.

[silver surfer]

1. Sterling crash and overseas buying power.

But sterling's fairly high

Edited May 15, 2014 by silver surfer

[fluffy666]

Instinctively I agree, but if it were true then wouldn't the South West have fallen further than the West Midlands, which I don't think is the case?

My guess is that the South West is a common destination for those who have had enough of London, so you get a fair bit of 'We sold our 1.5 bedroom flat in the east end and bought a small mansion in Dorset' going on.

[snowflux]

But sterling's fairly high

It depends what currency and time-scale you're looking at. Sterling crashed from about €1.50 to €1.10 during 2007/2008 and has since recovered a little to €1.20, i.e. nowhere near its value at the start of 2007.

[silver surfer]

It depends what currency and time-scale you're looking at. Sterling crashed from about €1.50 to €1.10 during 2007/2008 and has since recovered a little to €1.20, i.e. nowhere near its value at the start of 2007.

It's at $1.67!

[Quicken]

It's at $1.67!

Which is still below any point from about 2003-2008 pre-crash.

[renting til I die]

It depends what currency and time-scale you're looking at. Sterling crashed from about €1.50 to €1.10 during 2007/2008 and has since recovered a little to €1.20, i.e. nowhere near its value at the start of 2007.

You are of course right. People are rarely able to perceive changes over large time scales. I would say that sterling went from over valued to under valued very quickly and now is somewhere in the middle and slightly fair valued. As the financial press only ever look at the last 2 months or so they all think it is valued fairly high.

BTW if you want to see when sterling was valued much higher, then find a long term chart and see how many dollars for the pound you would have got back in the 1920's!

[gimble]

London's population is growing rapidly:

http://blogs.r.ftdata.co.uk/ftdata/files/2013/07/London-population2.jpg

[19 year mortgage 8itch]

. K: Only London has seen increase in employee jobs since 2008 http://on.ft.com/1g5Qgdu pic.twitter.com/gGuySGU5HY

This can't have hurt.

[silver surfer]

This can't have hurt.

Wow! That's quite a chart. So much for the "entrepreneurial revolution" sweeping the land.

[mikthe20]

Wow! That's quite a chart. So much for the "entrepreneurial revolution" sweeping the land.

For a few years now I've felt the future of work is basically self-employed, freelancing with multiple clients. This seems to be the case not only for middle class jobs (creatives, accountants, etc), tradesmen of course, but also traditional working class jobs such as retail using zero hours contracts. I didn't see the latter coming but probably obvious after the shutting down of major industries. It's actually how I've been operating personally for a few years now. Even many public sector jobs are two year contracts.

What I also didn't see is that if the future is freelancing for all, then there pretty much won't be stable employment by which to lend mortgages on. What I don't know yet is whether that means big house price falls or large proportions of the working population renting for ever. It should be the former but government-supported rentierism/exploitation probably means the latter.

Edited May 15, 2014 by mikthe20

[silver surfer]

London's population is growing rapidly:

http://blogs.r.ftdata.co.uk/ftdata/files/2013/07/London-population2.jpg

I knew London's population declined after the war, but I didn't appreciate it kept declining all the way to 1990. I wonder what caused to turnaround? Big bang?

[@contradevian]

It's at $1.67!

It was $2.11 before the crash

Mr Market said no at $1.70

Edited May 15, 2014 by aSecureTenant

[slacker]

I knew London's population declined after the war, but I didn't appreciate it kept declining all the way to 1990. I wonder what caused to turnaround? Big bang?

There was a period when people didn't want to live in cities. I saw some stats on Manchester a while back showing at some point around that time some areas dropped to almost nothing (sorry for vagueness can't remember where I read them now).

Everyone wanted to live in suburbs - it wasn't until early 90s that apartment construction started in Manchester and young people started moving back.

In London I remember a lot of East End being wasteland back then.

[Democorruptcy]

QE went to wealthy folk and London houses are acting like a currency/store of value to a wall of money from all over the world.

Maybe people closer to the City made more use of low interest rates? Using cheap leverage to play shares that have risen and so given them more money. People up North might be more likely to save rather than speculate, so via reduced saving rates they are in effect paying mortgages for Londoners.

[Greg Bowman]

QE went to wealthy folk and London houses are acting People up North might be more likely to save rather than speculate, so via reduced saving rates they are in effect paying mortgages for Londoners.

Or not taking advantage of a system open to all. - so that's my fault as a Londoner ?

[winkie]

My guess is that the South West is a common destination for those who have had enough of London, so you get a fair bit of 'We sold our 1.5 bedroom flat in the east end and bought a small mansion in Dorset' going on.

I think there is a lot of that.

[Democorruptcy]

Or not taking advantage of a system open to all. - so that's my fault as a Londoner ?

Touchy touchy....

Being in London you are more likely to have friends/family/work colleagues talking about speculating on shares than someone in an ex-mining town up North. Hope this helps.