Wednesday, May 04, 2005

In London, 27% Of Homes Are Secondary

The Guardian tells us there are many second homes in the UK. "Nearly 230,000 properties in England are now second or holiday homes. The largest concentration of second homes is in the financial heart of London, where they account for 27% of the total housing stock."

"Overall, second homes accounted for more than 5% of the total housing stock in 18 local authorities."

"Relatively high house prices in the main second home hotspots mean that a significant amount of potential demand is being diverted overseas where property can be picked up for much less money."

Who is going to be in these houses in ten years? "Nearly a third of people who owned a second home were aged between 55 and 64."

9 Comments:

At 8:51 AM, Blogger goleta said...

The apartment complex I live in are full of retirees and it's hard to believe how fast those once active retirees age. Good diet and regular exercise doesn't stop aging and in less than 10 years since I know them, half of them can no longer do daily things by themselves.

Most boomers still have active lives and are putting most of their retirement fund into RE market.
What they don't realize is they really have no control of their health after they retire. Most of them will sell their properties in the next 15 years, including their primary homes, whether there is a RE bubble or not. That alone can push RE market down for decades.


Friends working for major pharmaceutical companies like Amgen are amazed at the demand for their drugs never recede, as we're all "programmed" to get sick at certain time. Every year there are always new diabetes or any other chronic disease patients that the numbers are always consistent with previous generations, except some bad diet or life style only make things worse.

 
At 9:20 AM, Anonymous Rob said...

goleta:

If you are intersted in Demographics, and interesting read is "The Financial Day of Reckoning" by Bonner.

It is mostly a Gold Bug book, but it has some interesting views about how the US baby boom is roughly 10 years behind Japans. And as you have mentioned, as we age, our interests, spending habits and investing methods change a great deal.

The book shows some very spooky charts that show the center of the baby boom in Japan coinciding with there stock market peak in the early nineties, and when using the same method to identify the center of our baby boom population, how it coincides very closely to our market peaks in the DOW and NASDAQ in 2000. I guess the theory is that if the center of the boomers are at the magic age, then from that point on, few will be in the market for age related reasons.

 
At 9:25 AM, Blogger deb said...

I would like to see a stat on the percentage of people over 65 or so that carry a morgage compared to previous generations. A statistic relating mortgage cost to INCOME, not to the value of the house! I am tired of hearing the Fed say that the consumer is fine because the percentage of debt to household wealth looks good. The fact that people own LESS of their home when home prices are rising at a staggaring rate should be setting off alarm bells all over. If housing prices fall, the consumer's balance sheet is going to look like hell.

I am sure many more in prior generations were living in homes free and clear when it came time to retire.

 
At 9:53 AM, Blogger DrBubb said...

I live in London, and I found that 22% statistic shocking. I immediately thought:

Alot of these "second homes" may be in the Docklands,
near to The City: just a short ride on the DLR.

The market is likely to get "sloppy" if the Financial sector gets weaker.
Bank jobs are being shed already

The day of Reckoning may be fast approaching.

 
At 10:44 AM, Blogger goleta said...

Rob,

Thanks for the recommendation of the book. The reasoning is sound and I'll try to get hold of a copy.

Boomers account for likely over 1/3 of adult population and probably own 1/2 of RE properties. The sheer size makes any move they take magnified beyond anything we've seen before. The boom and bust of Y2K stock market is an example. Now it's RE's turn.

 
At 11:06 AM, Blogger Ben Jones said...

DrBubb,
Thanks for commenting and keep us posted on the City.

 
At 1:37 PM, Anonymous Rick said...

Looking through the RE websites in Europe you can see where all that pomme money is headed overseas. Seems the Brits are still enamored with Spain and now Croatia as least judging from the number of English based sites. Look for property in Austria and everything is still in German

 
At 2:41 PM, Anonymous isecondthat said...

I was in southern Utah a few weeks ago and met a few older couples who were buying 2nd homes in the area (St. George, Mesquite). It's about 2-3 hours outside Vegas, hi desert area, near Zion National Park. Kind of pretty in a hot dusty sort of way.

Homes are still relatively cheap here compared to the boom areas, but tracts upon tracts are going up. I would guess that many of them are being bought by oldsters as second homes.

The three couples I met came from LA, OC and Phoenix. All three of them were using HELOC money to buy the 2nd home. All three couples planned on retiring in the 2nd home and moving out of LA, OC and Phoenix. I asked them what they planned to do with their main homes? They said they would either sell them or let their children live in them.

The point here is that a lot of 2nd homes being purchased today are going to wind up being first homes soon. This means that there will be a lot of homes coming on the market in the years ahead, waves upon waves of them. After all, when a 2nd home becomes a retirement home, then the first home serves no purpose.

 
At 2:52 PM, Blogger Ben Jones said...

isecondthat,
Excellent first hand account. I have heard rumors about Utah building. Thanks for taking the time to comment.

 

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