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I am travelling this week, so I thought I would mix it up and write a shorter note about a couple of things that have come across my desk in recent weeks and caused me to sit up in surprise. First up, here is a chart of prime London house prices since 2010:
Prime London property is down around 20% from its 2023 peak and – more surprisingly to me at least – is more or less flat since 2014. And remember these are nominal prices: UK inflation has risen a cumulative 37% since the start of 2014. There are plenty of things to say here of course but I would highlight a couple. First, I generally view lower house prices as a transfer of wealth from the old to the young (and especially young people who aren’t in line to inherit that much). On that basis, I don’t see this chart as being all together bad. Second, one lesson you learn in this business is that if someone comes to you with an investment that is a no-brainer and can’t go down, it rarely proves to be that easy. Prime London property looks to be another good example.
Secondly, there is a general perception (which I share) that Americans prioritise work and office life more than their European counterparts. I was therefore surprised to see that Americans work from home much more than employees in countries like Italy, France and Spain (but not, interestingly, the UK!).
Part of what you see here is that more manufacturing heavy countries (like China) have fewer jobs where working from home is an option. But it is also worth noting that American companies are generating a better return on equity for their shareholders than you find in other parts of the world while still maintaining flexible working arrangements for their employees. There is a continuing push to increase the number of days employees are spending in the office. Some of you will think this is a good thing of course and some will not. But this is one piece of evidence at least that flexible working might yet turn out to be a win win for the employee and employer.
Chris Brown, CIO
cbrown@ipscap.com
The value of investments may fall as well as rise and you may not get back all capital invested. Past Performance is not a guide to future performance and should not be relied upon. Nothing in this market commentary should be read as or constitutes investment advice.
