STAG-BREXIT

On the list of cities with most expensive housing, London is quite high up. However, the city has a history of rising prices and an expected bubble that never exploded. During the past ten years, the housing market has experienced the most disrupted property cycle on record. In the midst of Brexit uncertainty, house prices in London dropped for a short bit after only to recover a few months later.

The house price growth has decreased and the number of houses sold in London has plunged. The housing market in London is more sensitive to the Brexit Saga than the English housing market.  

Uncertainty and fear after UK voted to leave the EU have stagnated house prices across the United Kingdom. The majority of news articles in the UK is concentrated around Brexit and the market sensitivity to the political clutter is now higher than ever.

Back in early 2016, England’s housing market flourished, when the average house price was £220,361, or approximately 9% higher than early 2015 and 0.1% higher than late 2015.

In June the UK voted to leave the EU and in July 2016 the annual and the monthly house price growth started its descent. Since then, the number of transactions fell as annual price growth slowed to less than 1%. Fears over Brexit caused English house prices to all but stagnate in 2018, rising by the smallest amount in almost six years.

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According to  the Financial Times, the Bank of England has claimed that London house price drop is unlikely to create a Domino effect on the rest of the country. Brexit related uncertainty is higher in the capital than it is in the rest of the country, causing a sharper drop.

With Brexit ,net migration from EU is expected to fall which in turn pushes demand for houses down which pull prices further down. Other related reasons to the slowdown of price growth are related to rising interest rates and the disproportionately increase in the rate of stamp duty, which makes buy-to-let investments less attractive.

However, what about house prices within London? Have all areas within London experienced the same price change? How do these compare with the rest of England?

Data and Insights

The figure below shows the average monthly price volatility of house prices in England, London and two neighborhoods of London, namely: Camden and Kensington & Chelsea.

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In general, the UK housing prices have not been as volatile as those of London’s boroughs. In Kensington & Chelsea, right before the vote the average house prices went up to an all time high at the time. In July 2016, Brexit played a role as house prices went down and so did the demand the coming months.

 

If on average an average house in Camden becomes almost £3000 more expensive each month, after Brexit this monthly increase went down to £2500. The story of Kensington & Chelsea is even more dramatic. An average house increases with £4500 and this increase went down to £2000.

What about the number of houses being bought?

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On the left hand-side the axis, the number of houses sold in England is shown, while London is on the right side. The remarking insight from the figure above is the almost hand-to-hand movement of houses sold in the England with those in London. The movements of the two correlate highly along time (r=0.9).

The figure above illustrates a sudden increase in the house prices of both London and UK in the beginning of 2016 which can explain the market flourishing during this period. This could have been driven also by uncertainty on what would happen after the vote which triggered fast buying. And then Brexit happened, and number of houses sold dropped for both London and England.

What confirms the predicted dynamics from the Bank of England, is the part after: London is showing a substantial decrease in the number of houses sold and so is England, but the drop in London was much harsher.

On the 15th of January 2019, House of Commons voted down the Brexit deal proposed from the government and uncertainty over the economic outlook will appear to be more dominant  in London than it is in England.image (2).png

More specifically within some areas of London, namely Camden and Kensington & Chelsea, the number of houses sold has gone down since June 2016 and if it keeps with the same trend, potential home buyers will not be lucky.


Download the full report: Stag-Brexit

Smells like Teen Spirit: How ’18 for Data was like ’91 for Rock and 3 key points for today

An industry dominated by a small number of old players, an audience longing for better and the upstarts who broke through big.

Yes, this describes 2018 in data, where traditional heavyweights Thomson Reuters and Bloomberg saw an increasing field of disruptors, but it also reflects, and offers a lot of lessons from, the music industry in 1991.

An industry dominated by a small number of old players, an audience longing for better and the upstarts who broke through big.  

For a quick and opinionated history, the friendly vibes of disco and psych-folk in the 70’s were eroded by the W shaped recession, stagflation and an international oil crisis, paving the way for a bleaker, heavier turn in both society and music.   

Metallica released their first studio record, Kill ’em All in 1983, but became cultural mastheads with the thrash metal darkness of Master of Puppets in 1986, with the two albums selling a combined 9 million copies in the US alone.  This heaviness was supplemented by the second wave of hair metal bands, notably Guns N’ Roses, whose Appetite for Destruction, released in ’87, sold  18 million copies domestically.  The rock incumbents were established.

The next few years saw greater bombast, and bigger sales (Metallica’s self titled 1991 record remains their best selling, with almost 17m copies sold in the US), but a waning connection with listeners.  Given the choice between heavy metal and hair metal, younger rock fans began to feel the apathy which would define Generation X.  Then came KC.

Alternative Rock Conquers the World

Little known label Sub Pop Records in Seattle released Nirvana’s first record, Bleach, in 1989 to middling success.  But it was the band’s 1991 release Nevermind on David Geffen’s DGC records which changed the face of 90’s rock, ushering in a raw sound stripped of pretense and even of meaning.  Gone were the costumes, the makeup and the arena theatrics, in their place an urgent, hazy sound, inviting the listener to define their own meaning.  This was alternative rock.

What is Alternative data? Alternative data is defined as data collected from new sources such as satellites or sensors, or used in new ways

And readers can now probably see the parallels.  Alternative data, defined as data collected from new sources such as satellites or sensors, or used in new ways, has been around for a long time, picking up pace in the middle of the last decade.  But 2018 was its major label moment, as NASDAQ purchased alternative data pioneer Quandl and almost 400 alternative data providers competed in the space.  

Indeed, Quandl’s Alternative Data Conference in February 2019, which Suburbia will be attending, is titled “The race to be first is over”.  The question is what comes next, and I believe the music industry has three important lessons for everyone.

1. Expect the Majors to Muscle in

Seattle post-Nirvana saw a flood of attention from major record labels, giving greater attention to bands like Alice in Chains or Pearl Jam.  Others were met with less commercial success, like Nirvana precursors the Melvins or Tad. Similarly, Quandl was not the only alternative data provider to be purchased, with 7Park being bought by Vista Equity Partners in December.

In theory this influx of capital benefits everyone, by giving smaller players more resources, the bigger players more market control, and end users easier access to new platforms.  

In reality, I see upsides and downsides.  The influx of capital has only just begun, and by 2020 expect smart investments to bring today’s alternative data startups to the next level of success.  On the downside, there will be major players who overpay to establish presence in a crowded market.

But don’t worry, the incumbents have the money to lose and are not going anywhere – Guns N’ Roses still sell out stadiums, and Bloomberg and Thomson Reuters’ Eikon will remain Wall Street fixtures.  They just won’t have the field to themselves anymore.

2. New players will be distributed globally

The Pacific Northwest is considered the birthplace of grunge but by no means its only home.  New York’s Gumball came from the opposite coast, The Smashing Pumpkins hailed from Illinois, Bush from across the Atlantic in London and Silverchair  across the Pacfic flew the grunge flag in Australia.    

Alternative data has similarly been an East Coast play, with Toronoto’s Quandl focusing on the hedge fund crowd in Connecticut and the banks in New York.  But there is a growing field internationally, with Eagle Alpha, one of the industry’s earliest and most influential players, based in Ireland and Suburbia headquartered in Amsterdam.

Asia remains under-served, with some firms including IHS Markit having a presence, but the heavy hand of government-linked corporations creates headwinds for independent measurements and verification.   Regardless, it is a matter of time before alternative data users and suppliers are truly global.

3. Nothing will be the same

Grunge as a genre began to fade by the mid-90’s, with Nirvana’s last album In Utero released in 1993 and the band dissolving the next year.  Mother Love Bone’s tenure was even shorter, breaking apart before their first album was released.  Even bands who stayed together changed their sound, with Pearl Jam’s 1996 album No Code turning towards ballads and garage rock.


But the mark of grunge was inedible in music, either directly as Nirvana drummer Dave Grohl’s next band Foo Fighters owned radio rock airways in the mid-90’s, indirectly with Marilyn Manson, getting input on his 1998 record Mechanical Animals from Billy Corgan of the Smashing Pumpkins, and passively in trending pop acts like Halsey, photographed in Nirvana t-shirts and whose 2018 track New Americana mentions Nirvana directly.

Outside of music, filmmaker Gus Van Sant’s mumbling cast were the outsiders raised on grunge, most clearly in his semi-biopic Last Days.  In fashion and art, the band’s iconic designs from the yellow smiley face to the swimming baby have been emulated from high fashion brand Lad Musician in Japan to TV’s The Simpsons, and broadly the dividing line between the mainstream and the underground has been blurred.

This last point is crucial when it comes to data.  Much like David Geffen’s major label DGC traded with tiny Sub Pop records, traditional releases like government reports or company earnings will become enriched with alternative data, and alternative data suppliers will find themselves collaborating with traditional sources.

Data driven decisions will no longer be the enclave of hedge funds who can afford multiple Bloomberg terminals, or large financial institutions purchasing reports from consultancies.  

In a few years the influence of new data will be pervasive across mediums, roles and industries, leading to more accurate measurements and better decisions for everyone.  Add that to the enduring legacy of Nirvana.

The Reason Why More London Bikers are Renting and Riding

Good news: Biking in London has become more popular. Every year the number of bike hires has increased and this is a good sign towards car-free cities. During summer the number of hired bikes together with the hiring time increases. This increase is mostly attributed to good weather but not only. In an effort to green commuting, London City has been pushing towards bike friendly policies.

Imagine yourself as a tourist in London. London is exciting and fun but it is also one of the most expensive cities in the world and the tube costs are quite high. Would you consider renting a bike to move around? Would it matter if it’s cold or warm? Would it matter if you had to bike for long?

The Brits might not be as crazy to cycle as the Dutch or the Danes, but with increasing bike infrastructure in London bikers are having it a lot easier to ride in a convenient, safe and obvious way to get around.

There’s a certain sense of freedom in biking. You hop on and pedal to wherever your legs can take you. Not only it takes you places, but biking has so many good externalities for your health and the environment.

However, cycling in big cities where pollution is the highest is not that easy. Cyclists face long distances, bad weather, heavy traffic, increasing number of traffic lights, lack of infrastructure and these are only a few of plenty of obstacles.
However the claim that distances are longer in large cities relies on the typical day-to-day journeys people make In reality, most trip lengths in large cities are actually short.

Huge improvements have been made to London’s cycling network over the last decade, with more driver awareness campaigns, higher safety precautions, more cycle lanes and extensions to the Santander Cycles scheme.

This report is going to look at the number of bike hires in London and the average hire time per month.

Data and Insights

Figure 1 below shows that the number of bike hires has increased since 2010. In 2017 there were more a bit more than 10 million bike hires in London and until 2018 there were 8 million hires recorded for this year.

Figure 1: Number of bicycle hires each yearScreen Shot 2019-01-03 at 1.17.46 PM

Figure 2 below shows the ongoing fluctuation of bicycle hires each month since September 2010. During September 2010 there were 540 thousand bikes hired in London, when as compared to 8 years later in the same month, there were over a million bikes hired.

Figure 2: Number of bicycle hires each month
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Hiring time has relatively decreased and spread out a bit more among months. Figure 3 below shows that the average hire time of a single bike in July 2018 was 23 min as when compared to April 2010 when the average hiring time was 27 min.

Figure 3: Average hire time
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During winter the length of a bike hire is smaller as weather does not allow for an enjoyable riding. However, what is remarkable is that the average hiring time has lower yearly variation now than it had 8 years ago and is spreading more and more out throughout the entire year.
One could claim that Londoners are caring less about the cold wind and more about getting healthy and saving the environment.
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