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

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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No Seat Goes Vacant – Spain v. The Netherlands

In a report published in August 2018, Suburbia looked at passenger traffic in the Dutch air hub (Schiphol). We showed in data what airliners are not accepting in words: more of us are packed per plane as the number of passengers has tripled and the number of airplanes has doubled.

Iberian airports are experiencing a transformation in their management and future goals. The increase in flying demand is seen as the next challenge in maintaining a sustainable industry that is eco-friendly and yet still profitable.

In Schiphol we noticed that the number of passengers per flight is increasing every year. The figure below shows that top four Iberian airports are keeping their number of passengers per flight relatively constant. Barcelona’s El Prat has the lead with an average of 146 passengers per flight since June 2016.

Figure 1: Number of passengers per flight leaving or arriving  each month in four largest Spanish airports:

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From the figure above we can see that airlines pack more passengers per plane during the busy months of July and August. This becomes even clearer when we compare this data with that of Schiphol.

Figure 2: Number of passengers per flight leaving or arriving  each month

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The figure above also illustrates that overall in Spanish airports there are fewer passengers per plane packed than when compared to Dutch Schiphol. Fluctuations in this number are remarkably so close that the coefficient of correlation between the two almost as close to 0.95.

In the peak of tourists, Spanish airports pack more passengers per plane than the Netherlands. From the figure above we can notice that the top four Spanish airports take the lead only during July and August.

Yet, Schiphol is the busiest Dutch airport and the argument above sounds like comparing apples and oranges. If we were to calculate the average number of passengers per plane in the Netherlands, we would get a more reliable insight.

Aye Carumba, Spanish Airports are Getting Overcrowded

Spain is a fascinating mix of people, languages, culture and food. Spaniards have it all in their Iberian peninsula. In 2017, the country climbed from third to second place in  tourist arrivals and held on to 2nd position in receipts.

In the same year, air passengers counted almost double the population of Spain. Gorgeous beaches, rich history, amazing food and cheerful people make tourism the third contributor in the economic activity. The Madrid – Barcelona route used to be among the busiest in the world thanks to tourism but the arrival of high speed rail has greatly dented demand.

Figure 1 below displays the number of passengers since June 2016 in the four largest Spanish Airports. Adolfo Suarez airport in Madrid is still the largest with an average of 4.5 million visitors each month and the highest peak in the month of July.

Figure 1: The number of passengers flying each month in the four largest Spanish airports:

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In terms of passengers, in August 2017 El Prat airport of Barcelona matched Adolfo Suarez of Madrid.

Figure 2 below illustrates the number of planes each month leaving and arriving the top four Spanish airports. In the plane classification, Madrid has the lead, followed from Barcelona El Prat.

Figure 2: Number of planes leaving or arriving  each month in four largest Spanish airports:image (22)

Nothing uncommon: When compared to February 2017 the number of planes increased by 80% in August 2017 and the number of passengers increased by 110%. If you are afraid of big crowds, going to the big cities in Spain during summer might not be the best idea.


Download the full report: What is the Spanish word for “Flight”?

You Buy Clean, You Pay Green

Going green is what every everyone is talking about.  In the market for cars, this debate is even more heated. The ‘driving green’ popularity has triggered a price growth in the green cars market. Fuel efficient cars are not the cheapest in the market anymore. Interestingly enough, during the last two years, the prices of cars labelled  B through G has decreased, while the price of A labelled cars has increased.

Green driving has never been as popular as it is today. The drivers behind sales growth of green cars are plentiful.

First and foremost, today we care more about the environment than we did twenty years ago. A few months ago, the UK went 55 hours without burning coal, which is something that has not happened since before the Industrial Revolution. Portugal produced more renewable energy in March than what the country consumed in the same month. (Quartz, 2018)

Secondly, car buyers have become more aware that the long run cost of buying a green car is much lower. In fact the greener the car, the lower the variable costs.

As electricity is cheaper than petrol or diesel, for gasoline cars to catch up to electric vehicles, they would have to improve their fuel economy tremendously.

Not only variables are lower, but maintenance costs as well. As the engines are simpler and help brake the car in a much more efficient way, it saves on car braking.

Thirdly, government support for green driving has never been bigger. In the Netherlands, the government has been investing in the infrastructure of charging points and has made switching to driving green less costly through discounts and grants.

Popularity in green driving was followed by a spectacular price increase. The reason is quite simple: when demand pulls, price follows.  And in case of green cars, their price boomed.

Data and Insights

Figure 1 below shows that relative to the rest, fuel inefficient cars have always been the most expensive ones and the price gap increased even more after the financial crisis of 2008.

Figure 1: Price evolution of A through G type of cars sold in the Netherlandsimage (12)

The price increase in G-labelled cars could be explained from premium pricing for luxury cars. The market for these type of cars is more exclusive due to high prices. And as these cars are highly crisis inelastic, the price gap became a lot bigger after 2008.

Since 2015, the prices of B to G type of cars have decreased from 10 to 20%, and the only category which saw an increase was A, the most fuel efficient type.

The figure below shows the percentage increase between 2005 prices and 2018 prices of cars by energy type. The price of A-labelled energy type of cars almost doubled and next in line is the percentage increase are G-labelled energy type of cars. B- through F- labelled cars saw a relatively smaller price increase.

Figure 2: Percentage Change in prices of carsimage (13)

Table 1 gives information about the average price of each energy label since 2005, its yearly price change and sales in July 2018.

Appendix

Table 1: Statistics on energy labels

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Download the full report: You Buy Clean, You Pay Green