Speaker 1: So here we are talking about the UK property market.
Speaker 1: Yet again, what we're trying to figure out, because let's
Speaker 1: face it, it's a national obsession, much like the weather,
Speaker 1: is where house prices from here go, and also trying
Speaker 1: to figure out what happens to commercial real estate. Welcome
Speaker 1: to in the City of Bloomberg's podcast, connecting you to
Speaker 1: the conversations at the heart of the City of London.
Speaker 1: I'm Francine Laquana. This week Temperature Check on really where
Speaker 1: things stand for both houses and offices across Britain and
Speaker 1: exactly how scary are things looking. For that, we bring
Speaker 1: in the experts, senior reporters Jack Sitters and John Steppeck
Speaker 1: and Sue London, a senior property analyst with Bloomberg Intelligence. John,
Speaker 1: you've been to Barcelona, so you're basically not that happy
Speaker 1: about being back because the weather is not as good
Speaker 1: as it could be and house prices are probably highed.
Speaker 1: Did you do any property porn looking?
Speaker 2: I'd say, did? Did you did? I'm sort of embarrased
Speaker 2: met that, because you know, I should be above these things.
Speaker 2: Were staying in a really nice bit of Barcelona and
Speaker 2: it's like one of these nice kind of like town
Speaker 2: flats and I was thinking, oh, wondering much this is,
Speaker 2: and then when I realized it was two million years,
Speaker 2: it was like, what, No.
Speaker 1: John, I only trust people that do that. I mean,
Speaker 1: if you go on holiday and have a nice time,
Speaker 1: why would you not, you know, pop by the estate
Speaker 1: agent to have a look at how much prices are.
Speaker 2: It's true, it's just I like to try and be
Speaker 2: zen about these things. I was just enjoying my holiday,
Speaker 2: take a break from worrying about property prices.
Speaker 1: Your newsletter is a bit scary, right because it talks
Speaker 1: about the UK housing market once again being in the
Speaker 1: balance to a bad well.
Speaker 2: I mean it depends like if you're looking to buy
Speaker 2: a house then that's probably for better. But I mean
Speaker 2: overall too, I think the UK economy is too driven
Speaker 2: by kind of the property market, not even driven by
Speaker 2: a bit. It's kind of held back a bit by
Speaker 2: the perception that basically that's the only asset that spot
Speaker 2: investing in in this country, and from a retail investor
Speaker 2: point of view, saying that that's a that's a bad
Speaker 2: thing overall terms, better to be hard with the housing market.
Speaker 2: It's kind of a kind of standoff. So on the
Speaker 2: one hand, like if you told I think everyone in
Speaker 2: this room the interest rates would go from one percent
Speaker 2: to over five percent and eighteen months this time last year,
Speaker 2: you would think a probably would be in a big
Speaker 2: recession and b house prices would have created and that
Speaker 2: hasn't happened. Like, house prices are down about four three
Speaker 2: four percent from the peak in August, more like twelve
Speaker 2: percent if you'd take inflation into account. But you know,
Speaker 2: they haven't crashed. The only thing that has kind of
Speaker 2: crashed it is transactions or so sellers don't want to
Speaker 2: pay and buyers don't want to sell out the prices
Speaker 2: that sellers can afford now, and that's basically because obviously
Speaker 2: mortgage courts have gone up, so sellers just simply can't
Speaker 2: raise as much money to buy houses. And really what
Speaker 2: happens next kind depends on if the labor market stays firm,
Speaker 2: and obviously wages were very strong today's we're recording this,
Speaker 2: then that means there probably won't be any forced sellers.
Speaker 2: But the longer this goes on for you know, or
Speaker 2: the longer you have to expect, well, something's got to give.
Speaker 2: And presuming the interest rates stay at least where they
Speaker 2: are for a long period of time, which they is
Speaker 2: very hard to see how they wouldn't. The thing that's
Speaker 2: got to give is buyers to say, well, okay, maybe
Speaker 2: we have to knock a bit off prices now because
Speaker 2: otherwise we're not going to be able to move. So
Speaker 2: that's kind of how we'd see it unfolding.
Speaker 1: But in terms of house prices and you know house
Speaker 1: price dynamics, I guess in support of higher prices or
Speaker 1: certainly not a cratering, there's also this funny supply and
Speaker 1: demand than in the UK. You know, we just don't
Speaker 1: have enough supply out there, and you're right, if wage
Speaker 1: prices go up, then you feel comfortable that you can,
Speaker 1: you know, maybe spend a little bit more.
Speaker 2: Yeah, I mean, well this is the other This is
Speaker 2: the kind of the things important prices as well, as
Speaker 2: long as jobs stay firm. Then some early London particularly
Speaker 2: and obviously I think probably London looms large over the
Speaker 2: general perception. But if it's a choice to be renting
Speaker 2: for a ridiculous mind payment, then most people are going
Speaker 2: to sit down and say, well, how can I turn
Speaker 2: my ridiculous rental payment into a ridiculous mortgage payment? And
Speaker 2: at least then I get the sense that I'm actually
Speaker 2: going to own a place at some point, and that
Speaker 2: perception is not necessarily always. The case is kind of complicated,
Speaker 2: and you need to think about your personal circumstances. But
Speaker 2: I can see that there's a pressure there because people
Speaker 2: fael caught between a rock and a hard place. I mean,
Speaker 2: physical supplying demand questions are really interesting. One. My view
Speaker 2: tends to be that interest rates are the main factor
Speaker 2: driving property prices simply because it's basically it's kind of
Speaker 2: like a bond. You know, obviously it's meant to yield
Speaker 2: a certain amount, and when interest rates go up, you
Speaker 2: need it to yield more. There for the capital values
Speaker 2: should come down. But obviously in certain places that simply
Speaker 2: aren't enough houses, because you know, everybody wants to live,
Speaker 2: you know, everybody likes leaving its own one, you know exactly.
Speaker 1: And you say rent prices are creat I mean they've
Speaker 1: gone up some thirty percent right into place in central London.
Speaker 2: Yeah, in London. I mean, the one thing I pointed
Speaker 2: with London is the prices did also kind of collapse
Speaker 2: and during the pandemic. So although you know, the last
Speaker 2: two years have been terrible for renters. Twenty twenty and
Speaker 2: twenty twenty one were great. I mean, I knew quite
Speaker 2: a few people from my own experience who ended up,
Speaker 2: you know, either moving a much nicer property for the
Speaker 2: same price, or you know, getting a much better deal
Speaker 2: on their rent. Because during the pandemic the city emptied out.
Speaker 2: So one reason's bounced back so much and so aggressively
Speaker 2: is because of that. But also landlords are selling up.
Speaker 1: So you have this as a mortgage, it is because
Speaker 1: mortgages are.
Speaker 2: Yeah, because the thing the landlord mortgages is that if
Speaker 2: you've got a mortgage as a landlord, it's an interest
Speaker 2: only loan, and so as interest rates go up, your
Speaker 2: mortgage kind of goes up at the same pace as them.
Speaker 2: But as if it's a repayment loan, you don't go
Speaker 2: up by as much. So like you know, if you
Speaker 2: don't if you had a by to let mortgage at
Speaker 2: two percent and it's now six percent, your monthly payment
Speaker 2: has trebled in that time. So a lot of landlords
Speaker 2: are finding that their cash flow negative basically by the
Speaker 2: end of the month, and that's being reflected and actually
Speaker 2: the repossession figures and also and the sales figure is
Speaker 2: one of our colleagues, Damien, just wrote a piece about
Speaker 2: landlords selling up at a much more faster rate than
Speaker 2: people expected. The problem is it's not first time buyers
Speaker 2: who end up getting those properties necessarily a lot of time,
Speaker 2: whither be either cash rich landlords or it will be
Speaker 2: possibly first time buyers. But then you're talking about these
Speaker 2: properties might have been multiple occupancy ones, so you've still
Speaker 2: get that kind of bottleneck there, which means that the
Speaker 2: supplier rental property falls and you still have a large
Speaker 2: number of renters who want to rent. In fact, the
Speaker 2: number of renters who want to rent goes up because
Speaker 2: people think, well, I'm going to hold off buy and
Speaker 2: in case prices fault. So that is kind of Horribleally,
Speaker 2: if you're in that situation, can.
Speaker 3: I ask you a question about the landlords and renting,
Speaker 3: because obviously they're the new EPC standards coming through, And
Speaker 3: at what point you think maybe the landlords, when they're
Speaker 3: making the decision on that six percent is looking pretty tough,
Speaker 3: do they sort of think, well, I've actually got to
Speaker 3: put quite a lot more capital into my property as well.
Speaker 1: For us, your mordals, what is EBC?
Speaker 4: Oh?
Speaker 3: Sorry, that's the environmental controls that the government is putting on.
Speaker 3: The first phase of that came in in April, and
Speaker 3: it phases up so that you've got to be an
Speaker 3: A or a B, which is quite environmentally friendly by
Speaker 3: twenty thirty. So it's only going to escalate. I mean,
Speaker 3: it's affecting commercial real estate. But I just wondered if
Speaker 3: it was also a trigger potentially for land laws moving
Speaker 3: out of the market because they're a bit scared. Some
Speaker 3: of those buildings that are rented out really do need
Speaker 3: some upgrades, don't they.
Speaker 2: I definitely know, and you're absolutely right. In fact, it
Speaker 2: was interesting because Damien's piece that I mentioned earlier, they
Speaker 2: kind of going back to the HMRC starts. They found
Speaker 2: that the by to sale off if you like, actually
Speaker 2: started and can I early twenty twenty one, so before
Speaker 2: the interest rates became such a big issue, and I
Speaker 2: think at least part of that is driven by the
Speaker 2: environmental standards because the art haven't the upgrade and those
Speaker 2: also obviously there's a general I feel like regulatory hostility
Speaker 2: to the small landlord. Now, I mean that started wee
Speaker 2: bike with George Osbond's tax changes, so we all have
Speaker 2: to be absolutely honest, my sympathies for landlords are not
Speaker 2: high because there's an awful lot of bad actors in
Speaker 2: the sector. It is not absolutely not the tame it
Speaker 2: can be in howmateur landlord, what we think they're getting then,
Speaker 2: and no, I think you're absolutely through. The EPC's definitely
Speaker 2: an issue as well.
Speaker 1: But in commercial real estate, I guess the way that
Speaker 1: the deals are structured, there's so much more leverage, they'll
Speaker 1: be much more sensitive to interest rate increases.
Speaker 3: Yeah, there is a broad span of that, and the
Speaker 3: listed arena the shareholders have been on and on about
Speaker 3: being highly leveraged for the UK roats for some time now.
Speaker 3: So even though you would be allowed to have normally
Speaker 3: on a loan coven into sixty percent loan to the
Speaker 3: value of the property. A lot of the main routes
Speaker 3: that were down in the twenties ahead of going into
Speaker 3: this period and now they're creeping up to the thirties
Speaker 3: isn't moving into the forties. And it's the commercial real
Speaker 3: estate companies that had sort of forty percent or more
Speaker 3: going into this that are the ones where the stress
Speaker 3: is really showing. In the private markets, quite often they
Speaker 3: would go to that covenant. So I think that there
Speaker 3: is going to be signs of distress, and certainly the
Speaker 3: routes are starting to say that, you know, there's some
Speaker 3: of that coming out. But I think Jack, you'll probably
Speaker 3: agree with me. On the operational side. You know, the
Speaker 3: properties which have got the good EPC ratings, that are
Speaker 3: environmentally friendly, that are brand spanking new, they're filling up.
Speaker 3: But seventy percent of what's vacant at the moment across
Speaker 3: Central London, for example, where vacancy's eight point five percent
Speaker 3: I think, and three point eight in the West End
Speaker 3: and about twelve percent in the city. I think there's
Speaker 3: the numbers you know that's all concentrated in the second
Speaker 3: hand property that hasn't been upgrade and it's looking a
Speaker 3: bit down at heel.
Speaker 1: And second hand property basically, Jack just means where you've
Speaker 1: had a lease and you're what the second tenants.
Speaker 2: It could be.
Speaker 5: Anything that isn't the sort of the best newest space,
Speaker 5: So you know, probably and that definition of what is
Speaker 5: the best space is getting narrower and narrow and narrower.
Speaker 5: So what location so very centralized locations. So if you
Speaker 5: look at some of the big companies that have moved
Speaker 5: recently HSBC for example, they've gone from Canary Wharf. They've
Speaker 5: chosen to come into the city, so you know, more
Speaker 5: central location. Similar for Clifford Chance, huge law firm who
Speaker 5: are Wharf, they've come into the city as well. You
Speaker 5: see a bunch of companies coming from sort of West London.
Speaker 5: You know, if you have a drive out of London
Speaker 5: on the M four, you see all those great big
Speaker 5: office buildings. A lot of the companies that use that
Speaker 5: type of space they've started to move in as well.
Speaker 5: And that's it's I think there's a number of different
Speaker 5: factors here on the sort of occupational side. I guess
Speaker 5: one of the realizations that companies have had after the
Speaker 5: pandemic and this whole experiment with more flexible working is well.
Speaker 4: Why don't if people are going to be in the building.
Speaker 5: Less, Maybe we need less space, but therefore we can
Speaker 5: afford to spend more on better space that will attract
Speaker 5: people in so more and amenities, you know, in easier
Speaker 5: to get to location, trying to incentivize people to come
Speaker 5: in and overall your cost probably doesn't change that much.
Speaker 5: I mean, it's also a very long term trend that's
Speaker 5: always worth bearing in mind, is forty or fifty years ago,
Speaker 5: rent would have been a lot of business's highest cost.
Speaker 5: Now it's tiny relative to labor costs. I mean, I
Speaker 5: think in the city it used to be something like
Speaker 5: forty or fifty percent that the average business costs would
Speaker 5: be on rent. Now it's more like five percent. So actually,
Speaker 5: in terms of sort of staff recruitment and retention, spending
Speaker 5: a bit more to get a better office can be
Speaker 5: quite a good investment for businesses, you know, because if
Speaker 5: it means you lose fewer staff ultimately that's that's pretty
Speaker 5: good for your bottom line.
Speaker 1: But Jack, that's a crazy number. So from forty percent
Speaker 1: cost it's gone down to five percent? Is this because
Speaker 1: everything else has become more expensive? H or rents in
Speaker 1: London also have come down.
Speaker 5: In real terms, they've come down, I mean, rents are
Speaker 5: very cyclical. To come back to something talking about earlier,
Speaker 5: it's it's been a really interesting year covering commercial estake
Speaker 5: because this time last year you could start to see,
Speaker 5: you know, the writing was potentially on all rates starting
Speaker 5: to ratch it up pretty quickly, And I remember hitting
Speaker 5: the phones calling various people who've seen plenty of cycles
Speaker 5: and speaking to senior private equity real estate investor, and
Speaker 5: he was like, look, you know, every real estate crash,
Speaker 5: every commercial real estate crash, is typically defined by a
Speaker 5: surfit of cranes or a surfit of credit, and we
Speaker 5: haven't seen that this time, so I'm not too concerned.
Speaker 5: But we've also never seen a modertary policy shift as
Speaker 5: rapid as we have this time. And so actually in
Speaker 5: the UK, the repricing, the sort of correction that we
Speaker 5: had particularly in Q four last year, but that did
Speaker 5: continue into Q one this year is the fastest we've
Speaker 5: ever seen. It's more vitiginous than the GFC, not as deep,
Speaker 5: but the rate of decline has been more quick. But
Speaker 5: at the same time, as soon mentioned, the operational kind
Speaker 5: of fundamentals are actually pretty good. There isn't that much
Speaker 5: excess supply. That hasn't been that much building. You Brexit
Speaker 5: put people off, developing been a whole, and then the
Speaker 5: pandemic as well, so there isn't loads and loads of
Speaker 5: kind of excess new space coming to my ow and
Speaker 5: the UK. On the public side, the UK reads have
Speaker 5: kind of learned their lessons in the GFC. Most of
Speaker 5: them came into this cycle with relatively low leverage. I mean,
Speaker 5: it's quite different when you compare it to the continental
Speaker 5: public landlords. A lot of them have come into this
Speaker 5: with you know, forty or fifty percent leverage, and that's
Speaker 5: going to get much uglier, I think. But I think
Speaker 5: the uk reaates broadly, certainly on the office side of
Speaker 5: been quite well behaved when it comes to leverage actually though.
Speaker 3: But I've just been looking at some of the stats
Speaker 3: for Central London that Derwert London, one of the big
Speaker 3: London uts, put out in their presentation for their results
Speaker 3: last week, and it is quite scary if you look
Speaker 3: at the take up and you look at the new starts.
Speaker 3: New starts on site in the second quarter of this
Speaker 3: year were really strong, and we've got a supply situation
Speaker 3: where there is forty five percent more space than the
Speaker 3: normal average being.
Speaker 1: Completed this year to what Central London.
Speaker 3: This is Central London offices for percent more and a
Speaker 3: lot of that has not yet been let Is that.
Speaker 1: Why I'm seeing like twenty five cranes out the office window.
Speaker 3: It could be reach many questions, all sorts of things,
Speaker 3: and I think it's probably smaller properties, but there's a
Speaker 3: lot of land also obviously put some money into that.
Speaker 3: Now the new starts this year, you can see, Okay,
Speaker 3: well that will be delivered in twenty twenty five. If
Speaker 3: I've got the funding for it, then I'm going to
Speaker 3: be delivering into perhaps a better market. That's what they're thinking.
Speaker 3: I'm not sure I entirely agree with them, because I
Speaker 3: think this might actually go along. But in terms of
Speaker 3: take up in the first half of the year it's
Speaker 3: thirty five percent below for normal level, So you've got
Speaker 3: disappearing on both sides. Rent in the city stayed flat
Speaker 3: about seventy pounds a square foot a year, and in
Speaker 3: the West End it's been creeping up. So you've got
Speaker 3: all these different things going on and it's really hard
Speaker 3: to see how it's going to go.
Speaker 5: Also, on those sort of capital market side, the fact
Speaker 5: that the UK and London in particular is corrected so
Speaker 5: quickly is a good thing because what you're seeing in
Speaker 5: content Europe, where prices haven't adjusted to interest rates and
Speaker 5: kind of everyone knows where they're going but nobody's admitting
Speaker 5: it yet, means you've just got this total stand off
Speaker 5: between buyers and sellers. Where in the UK, because prices
Speaker 5: have corrected and that was sort of probably aided and
Speaker 5: avetted by what happened last autumn with the mini budget
Speaker 5: and all the rest of it. There is a sort
Speaker 5: of pool of buyers who are sat on the sidelines,
Speaker 5: and we've had a few false storms this year where
Speaker 5: everyone thinks that rates are peaked, you know, and then
Speaker 5: you get a hot CPI print and suddenly expectations move
Speaker 5: out a bit. But as soon as there is a
Speaker 5: bit more certainty, a bit more confidence that you know,
Speaker 5: THEO has gone as far as it's going to go,
Speaker 5: I think you'll see quite a few buyers jump back in.
Speaker 5: And to your point around the increase in construction start
Speaker 5: to Looyte put out surveyed twice a year on called
Speaker 5: the Crane survey, you know, literally you know, measuring it up, Yeah, exactly.
Speaker 1: I count demise that coming into the office every day.
Speaker 5: And the striking thing from looking at the most recent
Speaker 5: one of those is that it's massively all those new
Speaker 5: starts are massively driven by refurbishments. And I think a
Speaker 5: lot of that is the PC thing that we were
Speaker 5: talking about earlier. So same for offices, You're not going
Speaker 5: to be able to rent them out at all unless
Speaker 5: they're this ALB by twenty thirty. Now whether the government
Speaker 5: sticks with that is another question. But so there's loads
Speaker 5: of landlords who are sitting on properties that you know,
Speaker 5: with leases that are coming to the end of their life,
Speaker 5: have just come to the end of life that are
Speaker 5: cory rated CD or an E, and so they're like, well,
Speaker 5: we're not going to be able to rent this unless
Speaker 5: we improve it.
Speaker 1: So what happens to these massive buildings and projects. I
Speaker 1: know HSBC got a lot of people talking because first,
Speaker 1: you know, it was seen as kind of the great
Speaker 1: hybrid project of people coming into work, so as Jack said,
Speaker 1: you need less offare space. But also it's a huge tower,
Speaker 1: Like what happens to the HSBC tower? Who's going to
Speaker 1: rent that?
Speaker 3: Those are really difficult questions. The way that it's structured
Speaker 3: for an office and the size of the floor plates
Speaker 3: means that it's very difficult to convert that into residential
Speaker 3: that you know, you're used to having all the wires
Speaker 3: under the you know, in between the floors. And I'm
Speaker 3: not an architect, I don't know all the construction details,
Speaker 3: but my understanding that you know, it's very difficult. So
Speaker 3: it's almost more economical to put the whole thing down
Speaker 3: and build something else. But on top of that, you've
Speaker 3: got to get the planning for it too, so it
Speaker 3: will take quite a long time. So you've got a
Speaker 3: long period where your money isn't going to be generating
Speaker 3: any cash. So you know, there are quite a big
Speaker 3: constraints towards that. And I'm a bit worried about Canary Wharf.
Speaker 5: Yeah, I think that that's just a very particular case,
Speaker 5: or in fact not just Warf but those types of
Speaker 5: very deh nineties early two thousand sort of banking towers
Speaker 5: are kind of white elephants, I think. On the conversion thing,
Speaker 5: if you think about big deep trading floor, you just
Speaker 5: can't really convert it in the flat because everybody needs
Speaker 5: a window unless you had a whole load of like
Speaker 5: very very narrow, long flats by the back.
Speaker 1: Of the foot of the children.
Speaker 5: Yeah, really dark, So that doesn't really work. I mean,
Speaker 5: in Canary Wharf Group's case, they're very well capitalized. It's
Speaker 5: owned by Brookfield and Qatar, They've got a lot of
Speaker 5: real estate acupant. Yeah, they will, and they've seen this
Speaker 5: coming for a long time, so they are gradually repositioning
Speaker 5: that state.
Speaker 4: I think they'll they'll be okay.
Speaker 5: But you've got some indivial dual you know, overseas investors
Speaker 5: who came in and bought what they thought was a
Speaker 5: trophy asset that maybe had ten years on the lease
Speaker 5: to Moody's or S and P or whoever it was,
Speaker 5: and now it's got five years on the lease and
Speaker 5: they don't necessarily have the skills to reposition that. And
Speaker 5: that's where you're seeing starting to see those pockets of distress. Ye,
Speaker 5: there's a couple of big buildings in Canary Wharf that
Speaker 5: are owned were owned by a Chinese investor, that are
Speaker 5: now in the hands of receivers. And I think it'll
Speaker 5: be those investors who bought just for the income who
Speaker 5: don't really have the skill set to reposition those where
Speaker 5: that'll be more difficult.
Speaker 4: Think.
Speaker 5: I think the solutions, you know, there'll be some life
Speaker 5: science space. That's one area where the UK is doing well.
Speaker 5: There's a big shortage of lab space. Again, there's a
Speaker 5: whole load of technical issues around which buildings you can
Speaker 5: change into lab space and which ones you can't anoun
Speaker 5: to do with floor to ceiling heights and loading and
Speaker 5: all this sort of stuff, but some of them that
Speaker 5: will work. Some of them will work for residential conversion.
Speaker 5: But yeah, the big skyscrapers like HSBC's, that's going to
Speaker 5: be really interesting. My understanding is some of the options
Speaker 5: that katar are looking at. There are things like putting
Speaker 5: in a huge auditorium so that all the tenants on
Speaker 5: Wolf State could share some lab space, some flexible office
Speaker 5: space would be a kind of a bit of a mixture,
Speaker 5: a bit of a vertical village type thing. But it's
Speaker 5: not easy. And there's a lot of big towers out
Speaker 5: there that are not fully occupied. You know, they might
Speaker 5: have somebody that currently pays the rent for the whole building,
Speaker 5: but they're not using the whole building. And when those
Speaker 5: leaders expire, there's going to be a question about who
Speaker 5: takes them on.
Speaker 1: If you will get interest rates if they go out,
Speaker 1: Does it make a huge difference to residential if interest
Speaker 1: rates go to five point five or six percent and above,
Speaker 1: or is that really the kind of stress that we'd
Speaker 1: see in commercial more than residential.
Speaker 2: It's probably not as quick for residential. And I said,
Speaker 2: one thing I thought was really interesting was the point
Speaker 2: of itut creams and credit because the other thing about
Speaker 2: the residential market is it is a similar story. And
Speaker 2: I mean, obviously there's never enough supply in the UK,
Speaker 2: but in terms of the cret that see the things
Speaker 2: you know on late two thousand and eight, the borders
Speaker 2: will not over stretched going into this spotillically. So one
Speaker 2: of the interesting things about how Britain obviously was kind
Speaker 2: of at this center of the two for nine talk cases.
Speaker 2: It's sort of meant that we spent the last fifteen
Speaker 2: years deal average and the law always and it's mainly
Speaker 2: only the government that's leveled up and the behalf of
Speaker 2: everyone else. So I mean, the consumers are in the
Speaker 2: businesses on the bills, the comminent of this, so on
Speaker 2: the funny ken of we that's why we haven't had
Speaker 2: the sort of the demolition you would have expected from
Speaker 2: reach's moving so quickly.
Speaker 4: And on the supply side, I mean, I totally agree
Speaker 4: with you.
Speaker 5: I think it's rates are definitely the kind of fundamental
Speaker 5: driver for house prices, but the supply is part of
Speaker 5: the picture. And when you look at the listed housebuilders,
Speaker 5: they've all massively taken their foot off the accelerator in
Speaker 5: terms of you know, how much they're planning to build
Speaker 5: and get The proportion of homes in this country that
Speaker 5: are built by the big four house builders is really
Speaker 5: unhealthily high.
Speaker 4: So when those.
Speaker 5: Guys say, right, you know, we're risk off, then that'll
Speaker 5: have a very quick impact in terms of overall new supply.
Speaker 5: I mean that the idea that we've got a three
Speaker 5: hundred thousand has a year target, we're not going to
Speaker 5: We haven't we.
Speaker 4: Haven't been hitting that anywhere.
Speaker 5: We're going to get so far off that over the
Speaker 5: next few years because they really have you know, again,
Speaker 5: they were very badly burned in two thousand and eight.
Speaker 5: They had these huge landbanks, so they had to write
Speaker 5: down massively and that was really ugly. Again like the
Speaker 5: read so I think the house build has largely learned
Speaker 5: their lessons. They've had, you know, smaller landbanks. They've been
Speaker 5: more quick to slow down on new land acquisitions. But
Speaker 5: yet the upshot will be that you'll have the added
Speaker 5: impact of lower supply that'll just helps prop up prices
Speaker 5: even more.
Speaker 1: Yeah, so I have ten million to give away to
Speaker 1: each of you. Where do you ten I'm so generous,
Speaker 1: maybe twenty million?
Speaker 2: Where do you put it?
Speaker 1: Would you invest it in real estate? Right now?
Speaker 3: John not.
Speaker 2: Because one thing I was going to see is the
Speaker 2: other good thing is that all the listed stuff so
Speaker 2: whose bill does created and you know, like and still
Speaker 2: very law and the reds also kind of ups and
Speaker 2: that's one of these things about the equity market and
Speaker 2: that obviously there's counts or the carvage and then when
Speaker 2: the car hasn't quit material. I mean, this is not
Speaker 2: personal advice thought the building.
Speaker 1: You're not buying that, you're not buying a property, You're
Speaker 1: you're investing property.
Speaker 5: This is the way I most regretted being restricted, like
Speaker 5: you've seen where the it's like, you know, fifty percent
Speaker 5: plus discounts to n a V in order prices would
Speaker 5: have to fall so far in order for that to
Speaker 5: not be a good deal. But public markets are public markets,
Speaker 5: and there's that same argument has been there for months
Speaker 5: and months. It has been but at some point the
Speaker 5: will and you know, people who are brave and willing
Speaker 5: to go and buy some property stocks now will probably
Speaker 5: again not not investment.
Speaker 4: There's potentially a lot of upside there.
Speaker 1: I can't believe you answered all of that seriously. I mean,
Speaker 1: someone say I'm making for a second in Scotland because
Speaker 1: of climate changeable. Thank you all, thanks for listening to
Speaker 1: this week's in the City. We'll be back next week
Speaker 1: in the meantime. If you like our show, please head
Speaker 1: on over to Apple Podcasts or wherever you listen to podcasts, rate, review,
Speaker 1: and subscribe. This episode was hosted by me Francin Laqua.
Speaker 1: It was produced by Summersati with help from Jil Namazzi.
Speaker 1: Additional editing by Blake Maples. Special thanks to Jack Sitters,
Speaker 1: Sue Munden, and John Steppeck.