Friday, April 2, 2010

Usual Times property spin

The mood is still fragile but confidence is building

but what interested me was the commentary about high speed rail. These kind of articles always talk about convenience of commuting but never price. The fact is, an annual season ticket to London from say, Norwich is £6,212 so anything you save from a mortgage by buying a less expensive house is lost on the cost of the commute. The future is perhaps home-working which I already do quite regularly (even though I live only a couple of miles from my office) although this is not practical for many workers.

Posted by tenant super @ 11:40 AM (1262 views)
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5 thoughts on “Usual Times property spin

  • mark wadsworth says:

    I have read plenty of articles referring to the fact that house prices in London are a fairly direct function of how many minutes walk they are from a Tube Station, i.e. take a base line of £x000 for a house that is ten minutes walk and then add £5,000 or £10,000 for every minute nearer the Tube.

    It’s the same pattern throughout the South East – a major selling point for housing is how many minutes walk it is from the nearest station plus how many minutes the train takes to Central London, I’ve seen figures of about £1,000 per minute, i.e. if the train used to take 60 minutes and the new service takes 45 minutes, prices go up by £15,000.

    This all makes good sense – if you save 1 minute on travelling x 10 journeys per week x 48 working weeks per year, that adds up to eight hours extra work or extra home-time. If people value their time at £5 per hour, that’s £400 a year. So taking the example of the 60/45 minute reduction, that’s £6,000 per year. You have to minus off that the higher cost of a ticket on a Javelin train, say £3,000 per year so people are willing to take on £15,000 extra mortgage which costs them (say) £1,500 extra a year in mortgage costs, so it all balances out. Of course there are some people who live near a Javelin station who don’t use the train who value the new service at £nil.

    Which is another argument for saying that a large part of ‘land values’ are actually the ransom value of people’s own time and energy. Whatever ‘saving’ these faster trains or better locations may ostensibly offer to the worker or commuter go straight into landowners’ pockets.

    Which is yet another argument for funding public transport out of a tax on land values. Those railways like Crossrail or Javelin cost money and they bring benefits. As the real economic benefit accrues to landowners, why not fund these improvements out of a tax on the increase in land values?

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  • tenant super says:

    Completely agree about the values increasing as the commute time decreases …

    but for many FTB with a young family they can’t afford the luxury of buying themselves the extra hometime. They can afford a family home in Norwich but not the commute as well.

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  • depends if there is anything left to commute for, london is not the be all, it is a dirty, high crime rate city with few British people living in it. even the cabbies i bumped into at gatwick airport said it was terrible now, these two guys live in spain and fly in to work the black cabs each week, they said they are so much better off for living in spain… what does that tell you when two black cab drivers from london now hate the place…

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  • Happyrenting says:

    Mark @ 3. I had exactly the same experience three years ago. Jumped in a cab in Euston, the driver was rattling on about how awful the place has become and that, if he were young like me, he’d be long gone. He too came over for a few weeks at a time to raise some cash driving his cab before jetting back to the sun. Very interesting snapshot of Britain (or London) today. But is this changing now with the collapse of sterling…? Are we seeing a resurgence of the baby boomers who realise that it isn’t all sun and fun – cash starting to dry up…? Ouch!

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  • tenant super says:

    That’s true but I went into an business which is limited to London (with one or two very small players in Oxford and Cambridge). Most of my contemporaries earn 35-60k in London meaning London property is unaffordable if they do not already own. They can move out to (sticking with the example) Norwich where they can afford a house but would struggle with the train fare as well. They can find a job in Norwich but the average salary there is £25K so they then can’t afford a house.

    The problem is that house prices to earnings ratio is too high everywhere. I was just pointing out that commuting from outside the SE isn’t really a solution for youngish FTB although the Evening Standard property supplements aimed at these people are rammed with developments in East Anglia and other regions. They advertise “Only 45 mintes to London Liverpool Street” but fail to mention the £6k cost. If a lender goes on the person’s salary to calculate what they can lend, they (or rather the person buying) should surely adjust that figure for people buying more than 20 miles from their workplace?

    As for the assertion that London has few British people living in it; More than 5 million (over 71%) were born in this country and are British even if they are from an ethnic minority. Approx 69.4 per cent of the 7.5 million inhabitants of London are white, with 58 per cent white British, 2.5 per cent white Irish and 8.9 per cent classified as other white. I am half Cape-Coloured and Mr TS is white Irish so even if we moved to an enclave of unusual Aryan purity, it wouldn’t be like that once we’d moved in!

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