Weekend reading: London stalling, with stagnant house prices and empty offices

What caught my eye this week.

For as long as I’ve been conscious of what’s happening beyond my own digestive tract, London was on the up-and-up.

From the 1980s yuppies I caught the tail-end of in the early 1990s and the regeneration of Docklands, to the middle-classing of the East End, the Dotcom bubble, the 2012 London Olympics, and the pre-Brexit immigration boom at both ends of the jobs market – London was where it’s at.

Of course, it wasn’t all rosy. House prices are up as much as 10-fold since I’ve been here. That long ago priced out most of those without parental help or huge salaries. Many London-born left the city altogether.

Also, despite all the wealth generation, some of the most deprived areas of the UK are still in London. Admittedly this has eased in recent years. But that’s perhaps as much because of gentrification as the locals getting richer.

Indeed, while the tidying up of London has suited my hipster tastes for flat whites, farmer’s markets, and retro beats, I’m not sure it was all good news.

Something was lost. London is less village-y now than when I came here from a real village in the provinces. Different boroughs have mostly the same shops, style, and people.

Though I suppose that’s happening everywhere.

The big smoke

Talking of everywhere, some readers complain when I focus on London every year or three in an article.

This reflects a wider sentiment – that London gets too much attention, and that we long had it too good in this city. (Though ironically, most of those who moan about London’s riches also say they’d hate to live here).

They feel aggrieved despite London being a net contributor (via its trade surplus and redistribution) to the UK economy.

And despite London being realistically the only place in the UK with the status to pull in enough foreign capital and talent to really move the dial.

Such regional resentment was one of the many motivations behind the unfortunate vote to leave the EU in 2016.

Yet despite the odd protest, I will continue to single out London occasionally, so long as I’m blogging.

London calling

London is my home, for a start. (Nobody minds when Ermine wanders about in the Somerset countryside or Dave has a run in the Highlands!)

Nearly a third of visitors to Monevator are in London, too. The three nearest web traffic rivals – Glasgow, Manchester, and Birmingham – account for only roughly 2% each. Besides the sheer population size, there’s a fit between our content and Londoners that definitely isn’t exclusive, but is pretty natural.

Also London makes a unique contribution to the UK economy. I have sympathy with the view that it’d be nice if it wasn’t so. But anyone seeking to change this is fighting a global trend. Or at least the pre-Pandemic trend.

Personally, I believe we should all be grateful the UK has (had?) one of the handful of world class cities, even as the economic centre of gravity shifts to Asia.

Home alone

Others will disagree. They’ll be heartened by this heatmap showing that while the housing market in England is on fire, London isn’t:

Squint at the blue bits

London house prices are still very expensive, despite years of flat-lining. So maybe they shouldn’t be rising. But property is soaring globally on low interest rates and the fallout from Covid, so something is going on.

It’s probably too soon to unpick the impact of the UK’s self-harming Brexit on London from the consequences of the pandemic.

Foreign-born workers have returned home for both reasons. And plenty of UK residents have moved home to outside the capital – or said they’d like to – now they don’t have to enjoy the supposedly gilded life of a Londoner squished into a tube at 7am to pay for a one-bed flat above a train station.

I haven’t yet decided whether widespread working from home – or at least not in the office – is a fad, or the new normal.

The City of London is still ‘fairly empty‘. London-based workers in general want more pay to return to the office. Only a minority are in a hurry:

With Covid-19 restrictions leaving many offices empty, white-collar staff have spent 16 months mostly working from home.

Just 17% now say they actively want a full-time return to the office [research shows].

The City of London Corporation has already started planning to redevelop excess office space into residential homes.

But when the big idea of the summer for making London a better place to visit and live was a £6million mound of earth, more might need to be done.

We’re shafted, or we’re Shaftebury-d

On balance I’m a bit more pessimistic about a full-blown return to office life than I was. (I mean pessimistic from an investing standpoint. I don’t think a five-day workweek in an office is particularly healthy!)

As a result I sold some early post-pandemic investments I made into quoted commercial property companies that owned mostly generic office space.

But I’ve hedged my bets with a position in Shaftesbury PLC.

Shaftesbury owns swathes of London’s West End – Soho, Covent Garden, Chinatown, and Fitzrovia. I believe you’d need much more money than the firm’s depressed valuation if you wanted to recreate this asset base.

I also judge that with a focus on leisure and destination shopping and the coming of the much-delayed Crossrail connections, if these areas don’t bounce back in the next few years then everything really has changed.

Normally everything doesn’t change. Time will tell.

Are you placing bets on the future of London, or the UK in general? Let us know in the comments below.

And have a great weekend!

From Monevator

Are meal boxes on the menu for FIRE seekers? – Monevator

Vanguard LifeStrategy funds: 10-year review – Monevator

From the archive-ator: How to enjoy life like a billionaire – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

Winchester the least affordable place in the UK to buy a home… – Guardian

…while Derry in Northern Ireland is the most affordable – Which

Vodafone to reintroduce roaming fees in Europe thanks to Brexit – Guardian

Energy bills to rise by average £139 a year when cap is raised – ThisIsMoney

PayPal says a Persian mousemat violates international sanctions – Guardian

Top players seek a financial game plan for life after sports [Search result]FT

A world awash in capital – The Big Picture

Products and services

Natwest and RBS offer £1,000 prizes for regular savings accounts – Which

Science-based productivity playlists to help you work from home – Trello

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade

Coventry Building Society rewards loyal customers with 0.65% 21-day notice account – ThisIsMoney

Address mismatches in databases can affect your credit score – Guardian

Five-year fixed-rate mortgages offered below 1% – Which

Island homes for sale, in pictures – Guardian

Comment and opinion

Diversifying your portfolio isn’t zesty, but it works – Bloomberg

17 questions to ask yourself before you quit your job – Guardian

Magic beans – The Reformed Broker

Setting an example – Humble Dollar

How to be poor and happy – Wellcome Collection

“My wife didn’t know I had $450,000 of debt until yesterday” [Podcast]Ramit Sethi

A weekly review of 100 years ago leading to the Great Crash – Roaring 20s

We are gonna make it – The Escape Artist

Do short-term flows permanently affect share prices? [Nerdy]Albert Bridge Capital

US market valuation mini-special

The US stock market looks over-valued by many measures – A Wealth of Common Sense

How much have US investors benefited from multiple expansion? – Morningstar

Naughty corner: Active antics

Forestry investors see the wood for the trees [Search result]FT

The war among the algorithms – Donald MacKenzie

It’s not worth building a portfolio of inflation-correlated stocks – Factor Research

Credit and asset booms may foreshadow financial busts – Verdad

Greedy investors make markets more efficient [Research]Joachim Klement

Covid corner

Warning of Covid ‘disaster’ in Japan as cases explode – Guardian

Kindle book bargains

The Moneyless Man: A Year of Freeconomic Living by Mark Boyle – £0.99 on Kindle

Hired: Six Months in Low-Wage Britain by James Bloodworth – £0.99 on Kindle

Happy Money by Ken Honda – £0.99 on Kindle

You Are a Badass at Making Money by Jen Sincero – £0.99 on Kindle

Environmental factors

The devastating new UN report on climate change, explained – Vox

Blazes burn across Med with more extreme weather forecast – Guardian

The other epidemic: what’s killing wild salmon? – The Walrus

Animals count and use zero. How far does their number sense go? – Quanta

The world must cooperate to avoid a space collision… – Nature

…meanwhile this asteroid is one of the likeliest to hit Earth – National Geographic

Off our beat

Hanging by a thread – Morgan Housel

Operating at optimal speed – Mr Stingy

Metabolism peaks at age one and tanks after 60, study finds – BBC

The creator economy is in crisis – Li’s Newsletter [hat tip Abnormal Returns]

And finally…

“You and everyone you know are going to be dead soon. And in the short amount of time between here and there, you have a limited amount of fucks to give. Very few, in fact. And if you go around giving a fuck about everything and everyone without conscious thought or choice – well, then you’re going to get fucked.”
– Mark Manson, The Subtle Art of Not Giving a Fuck

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