💥1/9: UK housing affordability since the year 1876 (UPDATED to 2022)

Average house~9x average earnings

Here’s a chart-thread of my research, as covered by:

@Bloomberg @Telegraph, @thisismoney, @TheSun, @guardian

Full article: schroders.com/en/insights/ec…

#houseprices #property
2/9 Last time UK houses were so expensive vs earnings was the year 1876

They were even more expensive previously…

What happened to change things? More houses, smaller houses, higher incomes.
3/9 Most people didn’t really benefit though, as over 75% rented at that time. Home ownership didn’t take off until 2nd half of 20th century.

Note the reversal post-2001. Home ownership becoming less attainable
4/9 housebuilding peaked in 1950-70s, although also peak time for slum clearance.
5/9 Big shifts in who has built houses. Private sector post-WW1, public sector post-WW2, private sector last 40yrs.

#SocialHousing?
6/9 Massive regional variation.

Average London house costs over 12x average wage, Midlands~7.5x, North of England, and Wales ~6.5x, Scotland 5.5x.

Regional divergence a relatively recent phenomenon. Didn’t exist to much extent pre-2000
7/9 #genderpaygap results in gender housing affordability gap.

Average London house costs over 14x average woman’s income.

#genderequality
8/9 falling interest rates have supported bigger mortgages

Issue hasn’t been the monthly payments, it’s been getting hold of the deposit

But now…

Potential homebuyers need to find more cash, lower their expectations, or prices have to fall (by enough)
9/9 The full article with lots more explanation, detail, and fun historical stats can be read here schroders.com/en/insights/ec…

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More from @DuncanLamont2

Oct 31, 2022
1/9 Why does high GDP growth ≠ high stock market returns?

1. Valuations - high growth may be already priced in via high valuations, similar to growth stocks vs value

2. The stock market is not the economy

1st is obvious (even if regularly forgotten)

2nd is worth diving into
2/9
GDP growth/corp earnings per share growth relationship like a watered-down cocktail

Gets less pure at every level

Last one key for China

Net effect huge (analysis from 2017 but still valid)

20yr EPS growth lagged GDP growth by average of 3.1% pa in EM

Much more in China
3/9 Why?

1. GDP may suffer from measurement issues

2. Corp profits in national accounts can grow faster/slower than GDP if profit margins are increasing/contracting

3. Sectoral and geographic distribution of stock market doesn’t match the economy.

This is a big one…
Read 9 tweets
Jun 16, 2022
1/6 Four perils for #PrivateEquity today-or are they?

1. Recessions are bad, right?

Nope. Funds raised in recession years have done very well. Capital is deployed over several years so get to pick up assets at beaten up prices, and sell later in recovery phase

#SuperReturn
2/6
2. Stagflation is worse though?

For some sectors yes but not all (based on analysis of public market sectors). Some could do well

- healthcare
- consumer durables
- anything that can save companies money (e.g. some business services)
3/6
3. Closure of exit windows (IPOs, corporate M&A) is a challenge

But could lead to a rise in secondaries. Both GP-led (where sell to another vehicle run by the same GP), and traditional LP-led (where an LP sells their stake to another LP) likely to rise
Read 6 tweets
Jun 15, 2022
1/4 Could/should private credit trade on tighter credit spreads than corp bonds?

If going into enviro when default risk 📈

- is ability to take action to mitigate your risk of default loss worth more than ability to easily sell an asset❓

A thought inspired by @CliffordAsness
2/4 Cliff’s argument is that the low, smoothed, vol of private equity is part of its appeal, so investors may be prepared to pay up for it

My argument for private credit is different ✋

(FWIW I agree that vol ≠ risk, everyone should be honest with themselves about this)
3/4 Why?

- much better access to info, much faster, than corporate bond investors. E.g. monthly updates from the CFO. Much closer relationship than in a mass syndicated loan or corporate bond issue

- can step in sooner to exert influence and protect value of investments
Read 4 tweets
Mar 22, 2021
1/8 What does almost two centuries of data tell us about #ukhousing affordability? Here’s a chart-thread of my research which @martinwolf_ covered in his latest @FT piece.
Full article here: schroders.com/en/uk/private-…
#houseprices #property
2/8 UK homes have only been this expensive vs earnings twice in the past 120 years.

Things were even more expensive between the year 1845 and early 20th century.

What happened to change things? More houses, smaller houses, higher incomes. ImageImage
3/8 most people didn’t really benefit though, as over 75% rented at that time. Home ownership didn’t take off until 2nd half of 20th century.

Note the reversal post-2001. Back down near 64% now. Home ownership becoming less attainable Image
Read 8 tweets

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