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Weekend reading: home truths

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What caught my eye this week.

There is an interesting article in the Financial Times this week that explains that new build properties aren’t as small as we’ve all been led to believe:

It turns out that, rather than shrinking, new homes have become larger.

The frequently used 76 sq m figure is simply wrong and does not reflect the reality of the recent housing market. A housing market analyst tracked the source of this figure to a report published in 1996 that was based on new builds in the 1980s and early 1990s […] the smallest on average of any period.

Unfortunately, the 76 sq m continues to appear in new articles and reports — a true zombie statistic.

Instead, new homes have actually been getting larger and are now slightly bigger, on average, than existing homes.

Apparently Help to Buy – or Help to Buy Bigger, as wags dubbed it – drove the building of more suburban four- and five-bedroom homes, at the expense of fewer city centre flats.

This doesn’t match what I’ve seen in London, of course.

But hey! It’s a big country out there…

Neal Hudson’s article is full of interesting facts. Give it a read if you’re interested in property (and please consider subscribing to the FT if you read a lot of these search links. I do and it’s a treat!)

Breathing space

With Labour aiming to see 1.5m new homes being built – um, someday – I presume this apparent trend for roomier living space will need to be reversed.

Especially as the listed housebuilders’ focus on making bigger ‘executive homes’ targeting DINKYs to rattle around in might be yet another reason why young people find nice no-frills starter flats so hard to snag.

I’m all for higher-density development. Provided the model is classy areas like London’s Maida Vale or Paris’ famously beautiful mid-rise boulevards. Not the high-rise horrors of yesteryear, obviously.

But I suppose that the desirable urban apartment model might face an uphill battle while lockdown – and the near-universal desire for a bit of outdoor space it inspired – is still fresh-ish in our memories?

Have a great weekend.

From Monevator

Reduce tax on savings by parking cash in gilts [Members]Monevator

UK and Europe dumps on Trump – Monevator

From the archive-ator: How I got mixed up in this FIRE business – Monevator

News

Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.

Bank of England cuts rate to 4.75% but hints at fewer to come – BBC

House prices have hit a new record, says Halifax – This Is Money

Mortgage rates to stay higher thanks to Reeves and Trump – iNews

Iceland’s four-day work week seems to be working out – CNN

Foreign buyers eye Japan’s empty houses, but experts warn of risks – CNBC

The ten fastest-growing scams of 2024 – This Is Money

Is Germany’s business model broken? [Search result]FT

The US market is top-heavy and expensive – Apollo Academy

Trump 2.0 mini-special

People really hate inflation – The Belle Curve

Francis Fukuyama: what Trump unleashed means for America [Search result]FT

Presidential terms, recessions, and bear markets – A Wealth of Common Sense

Trump 2.0 and the effect on UK investors – FT

VWRL salutes the new king – Simple Living in Somerset

The psychology of America’s divided politics – The Next Big Idea

Breaking down the election results – Slow Boring

Lessons from the post-Civil War era – Politico

Here’s hoping Trump’s VC supporters have his number – Newcomer

Identity politics isn’t working – Noahpinion

Has the US presidency become a dictatorship? [Podcast]Freakonomics

Products and services

The trend for ‘copycat’ ETF tickers – Bloomberg via Yahoo

Student loan overpayments reach £80m this year. Are you due a refund? – Which

Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine

Why are university tuition fees going up in England, and who’s affected? – Guardian

“I lost £15,500 to a Revolut bank transfer scam”Which

Is Amex Platinum’s £400 dining credit card worth a look? – Be Clever With Your Cash

Beautifully renovated homes, in pictures – Guardian

Comment and opinion

Slaying some of the biggest passive investment bogeymen – FT

Big inheritances can be a sign of underspending and poor planning – Morningstar

When did this bull market start? – Of Dollars and Data

Mohamed El-Erian: Budget puts Labour on the right track – Guardian

14 money lessons from 40 years of living – Mr Stingy

The great post-Budget pensions rethink [Search result]FT

Retire without regrets – Harvard Business Review

The ‘happiness plateau’ doesn’t exist – Bloomberg via Advisor Perspectives

Remember, remember – Klement on Investing

Breaking down the magic of portfolio diversification [Nerdy]CAIA

Naughty corner: Active antics

Was the Polymarket Trump whale smart or lucky? – FT

Bloated balance sheets in Japan – Verdad

Cash! – The Brooklyn Investor

Headlam isn’t right for a UK dividend portfolio – UK Dividend Stocks

No, higher corporate tax rates do not reduce profits – Klement on Investing

Kindle book bargains

I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle

Eat That Frog! Get More of the Important Things Done by Brian Tracy – £0.99 on Kindle

Growth: A Reckoning by Daniel Susskind – £0.99 on Kindle

A Confederacy of Dunces by John Kennedy Tool [Not financial, just a fav] – £0.99 on Kindle

Environmental factors

UK sales of used EVs hit a record – This Is Money

Many of the big indoor farming startups have shut down – PitchBook

Robot overlord roundup

What AI knows about you – Axios

Writes and write-nots – Paul Graham

AI search could break the web – MIT Technology Review

Off our beat

Read more books – Not Boring

What’s behind Big Tech’s return-to-office mandates? [Podcast]The Verge

How China is like 19th Century America – Construction Physics

How startups stopped being fun – Crunchbase [h/t Abnormal Returns]

What if America keeps getting better? – Drezner’s World

1,100 emails, a 90% open rate, and why people still ghost you – Nerd Processor

Can Starbucks make a comeback? – The Eater

And finally…

“There is no reason to sell a rising stock.”
– Nicolas Darvas, How I Made $2,000,000 in the Stock Market

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{ 16 comments… add one }
  • 1 Gentlemans Family Finances November 9, 2024, 10:25 am

    The size of housing in the UK is a real problem. I don’t know of many young people with too much space or too ma y rooms and don’t know of any older people who aren’t rattling around in houses bigger than they need (and don’t get me started on winter fuel allowance).
    But I believe the big difference in UK new builds is those that are built for owners occupation and those that are built for investment purposes.
    The homes under the hammer phrase “good enough to let out” comes to mind.
    Other countries have liveable flats, apartments and the like that the UK just doesn’t do – and new builds are typically on the edge of towns and cities, poorly connected, serviced and reliant on car transportation to get around (not to mention everyone parking on the pavements).

    The piece from Francis Fukuyama was good – but whilst history may have ended, the future still scares me.

  • 2 2 more years November 9, 2024, 10:28 am

    Very interesting FT article, thanks @TI. New build space standards have been increasing in recent years mostly in response to new planning requirements. These reversing previous trends led partly by the demographics of smaller households and partly by developer returns. Size matters but perhaps as important is quality. Higher mandated standards in many areas (esp. building safety and energy efficiency) obviously represent progress but until our broken planning system and the output quality of some of our major house builders is addressed, not optimistic of progress any time soon.

  • 3 John Edwards November 9, 2024, 10:28 am

    Following the devastating scenes from Valencia last week, some readers may be interested in the financial risks posed by the climate crisis outlined in this recent Guardian article…
    https://www.theguardian.com/business/2024/nov/08/climate-breakdown-will-hit-global-growth-by-a-third-say-central-banks

  • 4 159F November 9, 2024, 11:18 am

    Anecdotal I know but I attended a gathering of stakeholders centred around new build UK housing recently. Absolutely no-one in the room was optimistic on achieving any of the published targets. None. Too much radical reform in planning processes and pipelines needed and then there is the large uplift in the skills base (largely from increased immigration) to get even close.

    The cultural point about measuring “no. bedrooms” over sqm is true although I think that is starting to change. £/sqm figures starting to appear on selling details in places.

    In UK we’ve been building the “wrong” sorts of housing for years – room sizes less of an issue IMO. There are simply insufficient 3 bed semis with gardens etc for young families. And in 50 years the word “bungalow” will most likely have disappeared from use so few are built for the aging population to downsize.

    On Trump 2.0 – from an investment standpoint it seems there’s a major US sugar rush right now. One wonders if the bond vigilantes start to get busy soon? And I’d be concerned about an aggressive “Schedule F” implementation having all sorts of ripple effects politically in the US. Trump President for Life etc…

  • 5 dearieme November 9, 2024, 3:28 pm

    5 bedroom houses: an old friend told me recently about a house that’s been bought by a middle-aged childless couple he knows. Master bedroom; guest bedroom; bedroom that serves as a home office; bedroom that serves as a music room; and the bedroom known as the Lego room – where they assemble Lego models and display them to visitors.

    Am I grumbling? Nope – it’s their money.

  • 6 Boltt November 9, 2024, 4:05 pm

    @dearieme

    Currently discussing 2nd downsizing with my wife – her wish list is along the lines on:

    Option 2 – bungalow with large garden and loft conversion! (Ie a house)

    Option 1 – 4 bed detached with larger kitchen breakfast room for 20 bodies (and bi-folding doors) plus snug. And main bedroom, guest bedroom, study, craft room!

    I’m not sure it’s going to happen…

    Ps maybe we need 2 hobby rooms, some of that LEGO looks cool

  • 7 Bobby November 9, 2024, 4:27 pm

    Freakonomics podcast getting political. Used to be a good show. Sorry im not a pronoun guy and never will be. Now that Trump is in office keep it about money and finances and leave the political stuff for the news networks.

  • 8 hosimpson November 9, 2024, 4:43 pm

    Perhaps I’m reading it wrong, and I know for sure that I score towards the top of the anal-retentive spectrum, but I think the Apollo Academy’s graph is wrong. The Top 4 Average cannot be 39. I’d believe it if they said it was the Top 40 Average.

  • 9 Curlew November 9, 2024, 7:45 pm

    @hosimpson
    You appear to be correct. The average of 39.0 appears to be that of Apple, Nvidia, Microsoft and Meta. At 25 October, the top 4 included Amazon not Meta (https://www.investopedia.com/best-25-sp500-stocks-8550793) – of course, it may have change in the last two weeks. 🙂

  • 10 Ducknald Don November 9, 2024, 8:11 pm

    @Boltt Sounds like my wife who said we can downsize as long as it is to a bigger house.

  • 11 dearieme November 9, 2024, 9:51 pm

    Our four bedrooms are: master bedroom, guest bedroom, my little study, my wife’s Command Module.

  • 12 Nebilon November 9, 2024, 10:31 pm

    Our 4 bedrooms are (upstairs in converted bungalow) master bedroom and bedroom for husband to retreat to to get away from snoring when it’s bad and (downstairs in original bungalow) guest room and gmulti functional room containing books, workout stuff and sofa with fold out bed. There’s also a small study. But damn it I need a craft room! And husband would like a decent workshop.. but really it’s about layout as much if not more than square footage

  • 13 Mr Optimistic November 11, 2024, 2:44 pm

    Re house sizes. Looking at the new builds round here, the profit/ market sweet spot is clearly the fourth bedroom and second bathroom. The room sizes must be tiny.
    The morningstar article on underspending in retirement is spot on. Problem is, those of us conservative to have saved for old age tend to have a conservative outlook. The worst may happen. Talking about it doesn’t help: we already know it’s a problem!

  • 14 Al Cam November 11, 2024, 3:35 pm

    @Mr Optimistic (#13):
    Agree with you about the Benz (morningstar) post.
    Re: “Talking about it doesn’t help: we already know it’s a problem!”
    I get that, but do you have any other ideas/suggestions to address the “problem” you would like to share?

  • 15 DavidV November 11, 2024, 8:03 pm

    Regarding the Morningstar article, I always have a problem with the idea of lifetime giving rather than preserving wealth until it eventually passes as a legacy. In the absence of long-term care insurance in the UK, you never know how much care may cost you. Furthermore, if substantial amounts have been given away, this can be considered as deprivation of assets in any local authority financial assessment.
    I’m not saying that retirees shouldn’t help children or grandchildren for specific purposes such as a house deposit, but any wider attempt to pass on wealth during one’s lifetime strikes me as unwise.

  • 16 Al Cam November 12, 2024, 8:46 am

    DavidV (#15):

    Deprivation of assets is an interesting point with potentially significant consequences. However, it cannot be the case that fear of this should entirely stop you from doing what you want to. Age UK recommend legal advise prior to gifting, see:
    https://www.ageuk.org.uk/siteassets/documents/factsheets/fs40_deprivation_of_assets_in_social_care_fcs.pdf

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