Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Marine
Speaker 1: Dogs Money Market Wrap, where we talk about the biggest
Speaker 1: moves in the markets this week and what is driving them.
Speaker 1: I'm Marin's Umset, Web editor at Large for Bloomberg UK Wealth.
Speaker 2: I'm joined Stay Big, senior reporter and author of the
Speaker 2: Money to Steal newsletter.
Speaker 1: John, We're going to go on holiday soon, don't we,
Speaker 1: thank the Lord?
Speaker 2: I know, finally times.
Speaker 1: So before we head off to you know, rainy Scottish
Speaker 1: Islands and that kind of mark, we're going to talk
Speaker 1: about the thing that we know our listeners are mainly interested. Yes,
Speaker 1: it's harsh pressers, honey. He wrote about house pressures this week, John,
Speaker 1: I not going that well, is it?
Speaker 2: It was? You look at it right? Do you want
Speaker 2: them to go up?
Speaker 1: Do you want them to go down?
Speaker 2: It was interesting because this week rate Move Chemo and
Speaker 2: rate Move does asking placy and I've got them. I
Speaker 2: usually I can't help but take that way a pinch
Speaker 2: of salt because obviously it's very early data. It's also
Speaker 2: fueled off people's kind of anchoring bias, and it's always
Speaker 2: the first prices you don't get the newly listed ones
Speaker 2: that have had price reductions included. But so if you
Speaker 2: look at the trend, although the asking prices are obviously
Speaker 2: a lot higher than the achieved prices, the direction of
Speaker 2: travel is usually basically the same as nationwide or the
Speaker 2: O n S or any other house price index. So
Speaker 2: in this case, it was the biggest July fall on record,
Speaker 2: because asking prices usually fall in July because it's just
Speaker 2: a seasonal thing, but this was the biggest amount they'd
Speaker 2: fallen in the month. And also meant what was the number,
Speaker 2: I think it was one point eight percent, Okay, so it.
Speaker 1: Sounds very little bit annualized that and you've got a
Speaker 1: real number.
Speaker 2: Yeah, you basically annualized, be annualized obviously, but also the
Speaker 2: annual rate of growth is down to point one percent,
Speaker 2: So basically prices being flat. Inflation, I've inflation. And the
Speaker 2: interesting thing about it, I guess, is that activity in
Speaker 2: the market is basically normal. In twenty twenty two, when
Speaker 2: interest rates went up, we had a big crash in transactions,
Speaker 2: but prices kind of just trickled down a bit, whereas
Speaker 2: now transactions are basically back to normal, but prices aren't
Speaker 2: going anywhere. So it feels as if maybe just the
Speaker 2: market's waking up to the fact that well, actually interest
Speaker 2: rates are a lot higher. People can't afford to pay
Speaker 2: what you might have wanted, don't we pay, And we're
Speaker 2: just getting that gradual adjustment.
Speaker 1: And prices have actually fallen quite a lot in central London, right, Yeah,
Speaker 1: we keep hearing about particuarly at the top end price
Speaker 1: is way off. I mean, it's hard to get precise
Speaker 1: numbers on this, but when you talk to people about
Speaker 1: premium properties, I'll tell you that prices are down twenty
Speaker 1: percent plus.
Speaker 2: And also that they haven't moved since like twenty fourteen
Speaker 2: or something like that. I mean, it really is. I
Speaker 2: don't think this is even a particily controversial or surprising
Speaker 2: thing you say anymore, because I've heard it so much.
Speaker 2: I even so. Or somebody putting out quite an interesting
Speaker 2: wee contrarian view the other day that maybe now would
Speaker 2: be a good time to buy prime central London property
Speaker 2: because actually it hasn't gone anywhere and the terms is
Speaker 2: down a lot. I mean, I don't know. I mean,
Speaker 2: I think you can point to lots of different reasons
Speaker 2: for that, but it's hard to ask to pinpoint a
Speaker 2: specific one beyond. I mean, I guess it was a
Speaker 2: big beneficiary a capital flight, which I think people forget.
Speaker 2: I think that after the Eurozone crisis and the financial crisis,
Speaker 2: and also that was the time when Saudi Arabia particularly
Speaker 2: was cracking down quite aggressively on its richest people. And
Speaker 2: I say, remember there was an awful lot of capital
Speaker 2: flight from other parts of the world into prime central
Speaker 2: London roughly up until about twenty fourteen. And then obviously
Speaker 2: there was a lot of changes made stamp duty et cetera,
Speaker 2: et cetera, bresit. You know, you can argue with that
Speaker 2: that was healthful or not. I mean it mid stale
Speaker 2: Ingo down. You would think you would act living courage
Speaker 2: more people that buy Counting down and buy till Late.
Speaker 2: So I guess there's a lot of reasons why that
Speaker 2: idea may have sufficlarly.
Speaker 1: Yeah, And we hear a lot of the moment, don't
Speaker 1: we about how Americans are moving to the to the UK.
Speaker 1: If you have Americans, they're coming to the UK, They're
Speaker 1: coming to London, to they coming to Scotland. A lot
Speaker 1: we keep hearing that. I keep reading this in the papers,
Speaker 1: and then I ask Grand in Scotland and yeah, not
Speaker 1: so much.
Speaker 2: They do their taxes. The Americans so have held.
Speaker 1: Well, what happens is that they come to the they
Speaker 1: come to the UK and they think, well, they'll buy
Speaker 1: a house in Scotland or possibly in London, and then
Speaker 1: they find out that it's classified as the second home
Speaker 1: because they're keeping their apartment in New York or wherever
Speaker 1: it is, and the stamp duty is absolutely horrendous. So
Speaker 1: I think you're less likely to see people buying property
Speaker 1: in the UK when they see the upfront cost of
Speaker 1: doing so. And then of course we have this the
Speaker 1: constant story that we hear in numbers will become clearer
Speaker 1: over the next year or so of people leaving the
Speaker 1: UK at the top end, and that that will bring
Speaker 1: them selves through, right.
Speaker 2: Yeah, you would think so. Yeah, maybe it's the timing
Speaker 2: by if you've had your heart set and.
Speaker 1: Finally moving to nothing.
Speaker 2: Hell exactly, I want to live the huge dream. But no,
Speaker 2: I don't know. I don't know. I think I struggle.
Speaker 2: I feel excited about that as a trade, even though
Speaker 2: maybe it is I don't know.
Speaker 1: Anyway, you were mentioning earlier, we were we were making
Speaker 1: a final version of a podcast on housing market to
Speaker 1: go with our series on housing markets is coming out
Speaker 1: in a few weeks. And you mentioned in this correlation
Speaker 1: that you've seen or lack of correlation between transactions and
Speaker 1: spending on refurbishment.
Speaker 2: Yeah, well, this was something that popped up earlier this week,
Speaker 2: and it's not something It was one of the Bloomberd
Speaker 2: colleagues that wrote the piece, but I think it was
Speaker 2: content data from Savos. The number of home renovations getting
Speaker 2: done is like a ten year low, and it's basically
Speaker 2: because usually what happens as you expect that it's planning
Speaker 2: permission for important stuff like you know, changing l extensions
Speaker 2: and things like that, and obviously usually that kind of
Speaker 2: roughly goes in line with transactions because people move and
Speaker 2: then they do stuff. So it seems that people are
Speaker 2: now moving but not doing stuff. And Savos kind of
Speaker 2: puts it down to people just they sort of suggested
Speaker 2: that it's because there's more supply on the market and
Speaker 2: so people are able more readily able to choose kind
Speaker 2: of ove and ready properties and the ones you can
Speaker 2: just move into. But I think you could also look
Speaker 2: at clearly people haven't spend more to get in their
Speaker 2: property because interest rates have gone up. And also, i mean,
Speaker 2: the build cost inflation in recent years with COVID has
Speaker 2: been nuts. So I'm guessing that the kind of like
Speaker 2: implied value of doing a renovation is much much lower
Speaker 2: than it was maybe five years ago.
Speaker 1: It might it also be that there isn't a house
Speaker 1: left in the UK that hasn't already been fully renovated
Speaker 1: programs on the telly for decades. Is there a house
Speaker 1: left in central London, for example, without conservatory out the
Speaker 1: bank and assigned to return? And you know, that's I
Speaker 1: wonder if that's not something to do with it. It's
Speaker 1: almost given how few new houses we building, given that
Speaker 1: the housing stock remains kind of static, given that you know,
Speaker 1: turnover is reasonably high, and renovation has been on the
Speaker 1: go for forever, it's all done. It's all done. Literally, there's
Speaker 1: no one left he needs a conservatory.
Speaker 2: Well yeah, and also people did spend a lot of
Speaker 2: money on that house, is John COVID. So I mean,
Speaker 2: I can't imagine based on that. I mean, I mean,
Speaker 2: it's an interesting thing, you see, But you're right, there's
Speaker 2: a lot of different reasons that it could possibly be
Speaker 2: for that, Okay, well, there we go.
Speaker 1: Here's your chance. Now's the time to go out and
Speaker 1: buy a house, preferably in central London that is pre renovated,
Speaker 1: because there's millions of them right John to notting Hill,
Speaker 1: Thanks for listening to this week's Marrin Talks Money debrief.
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Speaker 1: and John Underscore Steppeic. This episode was produced by some Sadi,
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