Speaker 1: I think the weakness of the pand but also because
Speaker 1: of inflation, people hedging and thinking is property a good
Speaker 1: investment to put our money into? Um if inflation reaches
Speaker 1: e having having a bleed chirp, property could be considered
Speaker 1: a good idea, right. So actually, with all of the
Speaker 1: bad news for everyone, I mean it could be it
Speaker 1: could be good right for your under the market. I
Speaker 1: mean both in both surging inflation and higher interest rates
Speaker 1: as a result and a falling currency. You're making it
Speaker 1: sound as if I want this to dave a cost
Speaker 1: of living crisis so I can sell another I'm David
Speaker 1: Merritt with Francine macquar in the London studio and this
Speaker 1: is in the City Bloomberg's podcast, connecting you to the
Speaker 1: stories at the heart of the day of London. So
Speaker 1: this week we are tackling the question of property and housing.
Speaker 1: It is the national obsession of course, and the warning
Speaker 1: signs of flashing that we may be at some sort
Speaker 1: of tipping point for the housing market. This is a
Speaker 1: tough tough time to buy, so you're probably stretching yourself
Speaker 1: because of the cost of living, because of inflation to
Speaker 1: purchase that dream flat or is that dream house and
Speaker 1: everyone's scrambling to work out when should they re mortgage.
Speaker 1: I'm doing this myself at the moment as interest rates
Speaker 1: forecast to surge. We've had Bank of England rates going
Speaker 1: up faster than they have done for many years, and
Speaker 1: perhaps a sense of panics setting in about what might happen.
Speaker 1: We haven't had a proper housing crash in this country
Speaker 1: for a very long time. Joining is now as London's
Speaker 1: bureau chief Neil Callen and also fair to say an
Speaker 1: expert on the housing market. What you've been covering for
Speaker 1: twenty two years and have received over five housing emails
Speaker 1: from journalists asking from Martket advice. There's a lot of
Speaker 1: like first time buyer mistakes and people made that I'm
Speaker 1: happy to caution about because I have lived through a
Speaker 1: proper crash and eland where the value of my apartment
Speaker 1: fellent of one stage and you've seen booms and busts
Speaker 1: and boom like where are we in this kind of cycle?
Speaker 1: I think we're very much in the late stage of
Speaker 1: the cycle. And when you look at the figures there
Speaker 1: the UK housing boom since the financial crisis was driven
Speaker 1: by cheaper interest rates so people could borrow more, people
Speaker 1: could borrow for longer. And now with the Bank of
Speaker 1: England raising rates because of inflation, a people have less
Speaker 1: money to spend, but they're going to have to pay
Speaker 1: more for their housing costs. And I was literally had
Speaker 1: a friend texting me last week saying she's looking at
Speaker 1: her mortgage costs tripling next year. So you know, first
Speaker 1: of all, on average, what a new home buyer will
Speaker 1: spend two d and twenty thousand pounds on the place,
Speaker 1: which is which is quite expensive. I mean it's very,
Speaker 1: very expensive, especially if you're a first time buyer. Are
Speaker 1: we talking about possible market collapse that you know, the
Speaker 1: value actually evaporates, what's worst case thing? Are you so?
Speaker 1: At the moment houses in England are the most unaffordable
Speaker 1: level ever. There aren't only nine times income. Again, that's
Speaker 1: a sign Again I'm a market that's reached the new
Speaker 1: he kind of market that might be vulnerable realistically because
Speaker 1: it's taking so long for sales to go through. It's
Speaker 1: going to be more of a slow puncture again, It's
Speaker 1: going to take a while for the effect that the
Speaker 1: energy prices to come true. Lots of people are unfixed
Speaker 1: rate mortgages, but there are one point eight million people
Speaker 1: next year who are coming off a fixed rate mortgage,
Speaker 1: So it's going to take true to the four quarter
Speaker 1: last year before you're really starting to see the full
Speaker 1: impact of the mortgage rate increases, of the energy rate increases,
Speaker 1: of people having less money for food having to change
Speaker 1: and that just gives them less money to pay on housing.
Speaker 1: Does that mean we're going to see defaults? Everything at
Speaker 1: the moment is negative for housing, including construction costs are
Speaker 1: going up so you can't necessarily it's much more expensive
Speaker 1: to even do an extension and things like that. So
Speaker 1: what sort of rates are we looking at? I mean,
Speaker 1: I think there is one big qualifier I have to
Speaker 1: add before I answered this, which is that the government
Speaker 1: every single time the housing market has slowed down, the
Speaker 1: government has kind of intervened to support it with the
Speaker 1: sort of stamp duty measure or stamp. Julian helped to
Speaker 1: buy in particular and particular h and that has been
Speaker 1: a core tenant support in the housing markets. So the
Speaker 1: question is can they continue to do that help to
Speaker 1: buy his due to next year and maybe they extended,
Speaker 1: but then another question is will they have the money
Speaker 1: to be able to do that given the amount of
Speaker 1: money they've spent on COVID and they amount the money
Speaker 1: they're going to have to help spend helping households. But
Speaker 1: all out of side, I think you could be looking
Speaker 1: at a financial crisis type reduction which was around in
Speaker 1: the UK. I'm not saying that's going to happen immediately.
Speaker 1: It will take time. It will take probably at least
Speaker 1: eighteen months to start to come true. And these things
Speaker 1: happen tend to happen slower than you think and then
Speaker 1: happen faster at the end. But I still need to
Speaker 1: have to qualify if the government may stop it from happening,
Speaker 1: and it is in their interests to do so. Every
Speaker 1: single time the housing market slows down, the government stimulates demand,
Speaker 1: they do not stimulate supply, and that helps keep house
Speaker 1: prices high, which appeals to conservative work. Is London and
Speaker 1: Central London immune because of buyers from abroad? Well, Central London,
Speaker 1: the top end of Central London has already had a crash,
Speaker 1: and has had a crash since just before Brexit. It
Speaker 1: has rebounded a bit in the last year or so,
Speaker 1: particularly at the very very top end where overseas buyers
Speaker 1: who would have bought two years ago or last year,
Speaker 1: you have all the pent up demand coming in at once.
Speaker 1: Sorry by top enemy properties over a million pounds or
Speaker 1: really realisticing is Prime Central London. You're talking five million
Speaker 1: pounds plus and for houses probably ten million pounds plus um.
Speaker 1: So the volumes of those sales are much higher. But
Speaker 1: again it's a tiny part of the market. But even
Speaker 1: within that, if you look at Inner London, which includes
Speaker 1: Prime Central London and a few of the birds around it,
Speaker 1: how flat prices have been falling since January, but outside
Speaker 1: of that they're going up and they've actually just each record.
Speaker 1: So Prime Central London has had a bit of a comeback,
Speaker 1: but how sustainable that is we don't know yet. So
Speaker 1: far you're not seeing as much benefit from the pound
Speaker 1: the weaker pounders perhaps might have been expected. But in
Speaker 1: all of these cases it comes down to geopolitics. So
Speaker 1: the real reason Prime Central London took off ten fifteen
Speaker 1: years ago was the Arab Spring and events like that
Speaker 1: caused a lot of people to move Monday money to London,
Speaker 1: and there is not the similar thing happening because of
Speaker 1: Russians and Ukrainians who already had money, have already bought
Speaker 1: in London. Whether we will see money coming from Dubai.
Speaker 1: That's that could be really interesting to watch, Neil Callen,
Speaker 1: and thank you so much. So from quite wide look
Speaker 1: actually at the UK market and London in general to
Speaker 1: the very very high end. Yeah, that that's what we
Speaker 1: already want to read about, isn't it. What are the
Speaker 1: the people in the stratosphere spending their money on the
Speaker 1: super rich house important house. We can't get enough of
Speaker 1: it to say that we're not allowed to Okay, so
Speaker 1: we're allowed to call it housing porn and for which
Speaker 1: we're going to be joined by the Secret Agent. He's
Speaker 1: one of London's top property brokers which he goes anonymously
Speaker 1: in order to protect his very importance customers. And he's
Speaker 1: seen a thing or two. He has a tale to
Speaker 1: tell from every celebrity and their house. We are joined,
Speaker 1: very excited to be joined today in the London studio
Speaker 1: by one of London's top property brokers for the very
Speaker 1: super prime end of the market. He goes by the
Speaker 1: title of the Secret Agent. In fact wrote under that
Speaker 1: name in the f T for many years about London's
Speaker 1: property market. And we're going to stick with the Secret
Speaker 1: part because we really want to dive into the real
Speaker 1: juice of the market here, and I think keeping things
Speaker 1: secret might mean we get a bit more information. So
Speaker 1: maybe I just I'll just kick off with a pretty
Speaker 1: broad question. Now, there's so much bad news, isn't there
Speaker 1: about the economy, cost of living slow down and talk
Speaker 1: in fact about possible downturn in the housard market. But
Speaker 1: is this any of this affecting your clients or are
Speaker 1: they all operating up in the jet stream somewhere where
Speaker 1: they are immune to all of these headwinds. I would say,
Speaker 1: you're right, Dave, they are operating in the private jet stream,
Speaker 1: floating above in a private jet. Yes, very much, say,
Speaker 1: And I don't think that there wealth has been significantly affected.
Speaker 1: And I think that their wealth is such that for
Speaker 1: mas people, their home is probably their biggest asset. For
Speaker 1: the clients that we're dealing with, it's one of many assets,
Speaker 1: and normally you know they're lame, multiple properties, but their
Speaker 1: wealth will be greater through their businesses, through through other sources.
Speaker 1: I'm going to be the cross European show me the money.
Speaker 1: So what are we talking about? Like ten million plus
Speaker 1: in terms of property for London or more. Yeah, I
Speaker 1: think the super prime market in London is defined as
Speaker 1: five million plus. Most of this sort of trading that
Speaker 1: we did is probably ten million plus. But so are
Speaker 1: you not saying anything? I mean, is there no chill
Speaker 1: going through people's veins when they look at the news
Speaker 1: coming up the rest of the year or his life
Speaker 1: as Karen was normal. There was certainly a few plants
Speaker 1: who in Easter time who had owned their houses for
Speaker 1: decades and they decided to put their houses on the market.
Speaker 1: Then with the Ukraine War that Russians, no, no, no, no,
Speaker 1: we don't we We've never really dealt much with Russian oligarchs.
Speaker 1: I showed Mr Brown virtually few properties a while ago,
Speaker 1: but he never bought them. Know that they were British
Speaker 1: Ish families who had lived in their houses, as I said,
Speaker 1: probably bought them in the eighties and had lived in
Speaker 1: there for thirty thirty five years and we're thinking we're
Speaker 1: always going to sell and downside and moved to a flat.
Speaker 1: So they were there was a British owners. So in
Speaker 1: terms of the foreign capital is saying none of them
Speaker 1: decided to say it was time to or not deciding
Speaker 1: it's the time to get out of this market. No,
Speaker 1: I think that those the foreign capital who we're going
Speaker 1: to go have gone pace Braxit. And I think the
Speaker 1: big one of the big pills that I see with
Speaker 1: clients who buy in London is the sort of education here. Yeah,
Speaker 1: but secret agents. So is there a secret I love
Speaker 1: saying that. So secret agents tell me is there a
Speaker 1: pattern amongst the ultra high net worth individuals of at
Speaker 1: what point do they sell? Well? Well, I suppose they
Speaker 1: mean the two clients I'm thinking of had probably as
Speaker 1: I said, bought three decades prayer. And I mean an
Speaker 1: interesting sort of fact the year before that when I
Speaker 1: was selling a house in notting Hill and they had
Speaker 1: there were two clients who had bought in the late
Speaker 1: seventies and one in Wandsworth and one in notting Hill
Speaker 1: in the sort of prime street of notting Hill going
Speaker 1: onto a communal garden, and they bath bought for two
Speaker 1: eighty thousand, and the client who sold in notting Hill
Speaker 1: sold for nineteen million, and the one in one's Worth
Speaker 1: sold for three and a half million. So it just
Speaker 1: shows also how particular pockets within London have gone in
Speaker 1: the stratosphere. And one obviously you know if the ones
Speaker 1: Worth people would have been very happy happy, right, But
Speaker 1: it's not the kind of like winning the lottery and that.
Speaker 1: But I mean that the I mean the return on
Speaker 1: that that's the best investment ever, right, I mean, do
Speaker 1: you and London property has been seen? Has it as
Speaker 1: an investment all around the world people to pull their
Speaker 1: cash in to get I mean, is it possible to
Speaker 1: get that sort of return anyway? Are there any where's
Speaker 1: the next nothing hill? Is it possible to have that
Speaker 1: sort of boom again? Give us some tips please, mr agent?
Speaker 1: Well I was. I mean, I'm slightly burst because I
Speaker 1: live notting Hill adjacent in um if some people call
Speaker 1: it made a veil when I want the value to
Speaker 1: be her, I refer to it as Little Vernice because
Speaker 1: it sounds more moneyed Little Vernice. But I think that
Speaker 1: is possibly undervalued, possibly Queen's Park. I mean, I'm not
Speaker 1: just because of our client base. I don't really you know,
Speaker 1: I know South London is having a moment, but I'm
Speaker 1: not going to be an afficionalgo on Lewisham or Peckham.
Speaker 1: So that's COVID change. Do people want to buy minor
Speaker 1: houses or they still want central London? And actually is
Speaker 1: it's you know, money that elsewhere doesn't feel so safe.
Speaker 1: Were thinking of Hong Kong. We're thinking maybe of certain
Speaker 1: parts of the Middle East where the buyers that are
Speaker 1: extremely wealthy say I need a second home in London
Speaker 1: or a first time in London. I thought that my
Speaker 1: business would pretty much be over when CAVID started, because
Speaker 1: that everybody was talking about cities being over. And I
Speaker 1: actually set up an affiliation with somebody in the CUTS
Speaker 1: world because I was brought up there and I thought
Speaker 1: everyone's going to be moving there. The first gap after COVID,
Speaker 1: I sold a house in Kensington a video you know
Speaker 1: What's up video. The decorator came along to you because
Speaker 1: I insisted. I said I want the decorator as well.
Speaker 1: They didn't see the house and they didn't see the
Speaker 1: house there Google match it. It was in Kensington. They
Speaker 1: bought for sixteen million over over over what. I don't
Speaker 1: think that picture quality was as good as zoom and
Speaker 1: and my and the clients who I was acting for
Speaker 1: selling the property, I think they they couldn't believe it.
Speaker 1: They just said that this is not Nobody is going
Speaker 1: to spend sixteen million. And until the day of exchange.
Speaker 1: They didn't believe it until it and it happened. So London,
Speaker 1: I think, is just remarkably resilient and the market is
Speaker 1: stronger now in prime London than it was immediately post covidd.
Speaker 1: You do you walk in a place and say right that,
Speaker 1: I'm valuing this at fifteen million, and I know who
Speaker 1: will buy it. I did see. I did see a
Speaker 1: house the other day which was sort of hidden and
Speaker 1: I and I knew the streets quite well at their
Speaker 1: major houses with big gardens and lots of security hard
Speaker 1: standing outside them, and there was this tiny little alleyway
Speaker 1: and um, it was this sort of French chateau in
Speaker 1: a third of an acre with a very cool sort
Speaker 1: of outhouse that felt as if you're in Laurel Canyon
Speaker 1: in l a as a sort of and the agent
Speaker 1: was saying you could be in Beard And I did
Speaker 1: think that if you've got twenty million to spend, you
Speaker 1: probably don't need the Airbnb income of But I did
Speaker 1: say to I said, you know, I didn't even know
Speaker 1: if he's looking. I don't know what his taste is.
Speaker 1: But I said, Harry Styleship by this because it's very
Speaker 1: private and he could turn he could turn the little
Speaker 1: studio into a recording studio. So with Harry's listening, he
Speaker 1: can you can get in contacts. Well, you can get
Speaker 1: in contact with Francine and Day and then then then
Speaker 1: they can connect us. What's the craziest thing that people
Speaker 1: have asked foreign houses? Do they ask you for a
Speaker 1: specif fix or do you assume that a lot of
Speaker 1: them than just redo them anyway like Trump did at
Speaker 1: the White House. When I started in the business, I
Speaker 1: think people wanted a blank canvase, so they wanted something
Speaker 1: that was tired and they wanted to make their own mark.
Speaker 1: I think increasingly now and this probably happened with the
Speaker 1: sort of super developers, and maybe it's a sort of
Speaker 1: reflection on our sort of fast society that you want
Speaker 1: it and you want it now that now it's much
Speaker 1: harder to sell an unmodernized flat or house and people
Speaker 1: want turnkey. They're old Libyan school in Ely Place has
Speaker 1: been done that redeveloped and it's two houses and I
Speaker 1: think it's eight or nine flat and the starting prices
Speaker 1: for the flats of forty million, and most of them
Speaker 1: have their own swimming pool. The flat have the swim
Speaker 1: because you go and you have a direct left access.
Speaker 1: One of the two of the flats have them on
Speaker 1: sort of reef terraces, and the other ones have direct
Speaker 1: lifts into sub basements where you go and have your
Speaker 1: swimming pools. So I think five of the flats have
Speaker 1: got swimming pools, and each of the flats we're done
Speaker 1: by a different designer, I mean big name designers, so
Speaker 1: you literally artwork, furniture, everything. So you walked in and
Speaker 1: I mean I thought it was quite a risky strategy
Speaker 1: because you want everything to work and everything to be perfect.
Speaker 1: But people do have their own taste, and I think
Speaker 1: they haven't actually sold very well. And those brand new
Speaker 1: superprime development. Do you see the buyers there, Do you
Speaker 1: think all that stuff is gonna is going to sell?
Speaker 1: I think they'll struggle, Um the skirt of it. That's
Speaker 1: just too much of it, I think. And I think
Speaker 1: that it's a very international market, whereas the market that
Speaker 1: we deal then primarily is international, but it's people who
Speaker 1: live here that London say home. So we have a
Speaker 1: lot of buyers who may not have been born in
Speaker 1: the UK, but they're sort of committed to living here,
Speaker 1: certainly for the foreseeable future, whereas the Chelsea Barracks developments
Speaker 1: and others. It's usually a third or fourth home. And
Speaker 1: I think, you know, maybe to a wealthy American or
Speaker 1: Middle easterner. And I think those buyers, you know, why
Speaker 1: not staying clarages, you know, for for two weeks when
Speaker 1: you come over. So how many how many of the
Speaker 1: houses you sell you think remain empty throughout the year
Speaker 1: or mostly empty throughout the year? Very few? And and
Speaker 1: the ones that do I find very depressing. I mean,
Speaker 1: we sold a house in Belgravia seven or eight years
Speaker 1: ago and it was Middle Eastern gentlemen who had bought
Speaker 1: it fourteen years before that, so it held it for
Speaker 1: four years and nobody had spent a night there, and
Speaker 1: it was used as a sort of storage facility, so
Speaker 1: I had amused at the back. So there were two
Speaker 1: I'm not very good with the cars, but I think
Speaker 1: a Rolls Royce Phantom and something else. And it was
Speaker 1: it was a depressing house to walk into. What is
Speaker 1: the impact of the Russians having to sell up? Does it?
Speaker 1: Does it matter? That's all? For London. I think the
Speaker 1: impact is not nearly as great as has been talked about.
Speaker 1: Because I think the spread of property that the Russians own.
Speaker 1: You know, there's a lot in Weybridge and sorry for
Speaker 1: Junior Waters, there's some in Belgrave here. One of the
Speaker 1: houses Mr Rono Chains is on Kensington Palace Gardens sort
Speaker 1: of Millionaires Ray beside Kensington Palace. It's a very very
Speaker 1: small percentage of the super prime property population, so it
Speaker 1: doesn't make a ripple really in the whole in the
Speaker 1: whole world. And are there buyers ready to come in?
Speaker 1: Do you think it's not like that place on Kenston Palace, Scotland.
Speaker 1: I mean that's a huge house. Yeah, what would you estivate?
Speaker 1: That's worth I should think between a hundred and fifty
Speaker 1: and two hundred million. And you've got you know, the
Speaker 1: Mittel's next door. There's not many families who are people
Speaker 1: who could afford that? Right? But do you think that
Speaker 1: will sell? Reddy? I think that street will sell. I
Speaker 1: mean I think you know, the big whopper in sort
Speaker 1: of Winnington Rage and Hampstead could be harder, but that
Speaker 1: that street. I mean, I've I've got three buyers who
Speaker 1: would Yeah, who are or I know of them and
Speaker 1: I can get to them? Who would buy on that Street, secret, angent,
Speaker 1: what's your secret to set to? And people trust you
Speaker 1: with big decisions, with personal decisions because it does really
Speaker 1: touch to who you are as a person, you want
Speaker 1: to live as a family. Well, I think, you know,
Speaker 1: part of my job is part therapy and understanding what
Speaker 1: people want and sometimes maybe seeing something that they don't
Speaker 1: realize that they want and uncovering it. I remember my
Speaker 1: biggest client in the first big deal I ever did,
Speaker 1: was a house in Eaton Square and the client was
Speaker 1: buying it for her son, who was twenty two years old.
Speaker 1: And we went out for lunch and she said to me,
Speaker 1: you know, should I buy this house? And it would
Speaker 1: have been my you know, greatest commission of her And
Speaker 1: I said to her, no, don't buy this house. And
Speaker 1: she always called me darling, still does and she said, Darling,
Speaker 1: why why why don't I buy this house? Why don't
Speaker 1: I buy it? Because she also says that words a
Speaker 1: lot And I said, you know, your son is twenty two.
Speaker 1: A freehold house in Eaton Square is the sort of
Speaker 1: apergee of your property aspirations. And where is he going
Speaker 1: to go? Hill? There's nowhere to go. And she said
Speaker 1: to me, Darling, that's where I like you. She was
Speaker 1: a test. She bought the house. She bought the house,
Speaker 1: but I told her not to buy the house, and
Speaker 1: four years later she bought her house. That was more
Speaker 1: than I was wrong because you could go higher. She
Speaker 1: bought her house double the price of the house in
Speaker 1: Eaton Square for the sun. So it but it's it's
Speaker 1: sort of trust and them knowing that you're looking out
Speaker 1: for them. Thank you so much, Secret Agent. Thank you
Speaker 1: very much. I feel like I'm an octonaut. Thank you,
Speaker 1: Secret Agent. Should I say a secret agent? Or is it?
Speaker 1: Thank you Mr Agent? I just love it so much,
Speaker 1: thank you Mr Secret? Is it, Mr Secret? Mr Agent?
Speaker 1: I love it. I'm really just buy movies that but um,
Speaker 1: there we go, do all of that right, Thank you
Speaker 1: so much, Secret Agent. Thank you, thank you very much.
Speaker 1: I'm definitely using the first brilliant h