Posh car or posh pad? Which would you choose?Savills thinks it has the answer. The agency today came up with a rather cute and novel way of testing the health of the high end residential market in the south east.
The agency has pegged sales of prime property versus new car registrations for Aston Martin, Bentley and Porsche's. And in the south east posh pads have won out to racey motors.
Click here to see Savills graph: sales versus new car registrations.ppt
Savills question whether this could hold the key to UK house price growth? The science behind it is that low interest rates have boosted the incomes of some households, so while they've been reluctant to commit to long-term financial commitments they've been happier to purchase a new car.
However, in the south east, the demise of the bonus from the financial and business sector means that the boys have less to spend on toys. The one source of comfort Savills takes is that "by the time the luxury car market takes off the prime property market will be well and truly firing on all cylinders."
The reasons, it reckons, is that property doesn't depreciate in the same way a car does and as a result prime resi markets in the south east have risen by 11% since the bottom of the market.
Head north though and it's a slightly different story. Prime resi in the Midlands, the North of England and Scotland are at last seeing a ripple of positive sentiment from down south but growth has been a much more sober 3%. These markets, say Savills are more likely to be affected by the harsh realities of the emergency austerity budget, and the general economic outlook for the country.
With little prospect of any good economic news emerging over the rest of the year, values to the north of Watford Gap are likely to be soft for the rest of the year.
Porsche picture by Fabio Aro on Flickr used under the Creative Commons license
Head north though and it's a slightly different story. Prime resi in the Midlands, the North of England and Scotland are at last seeing a ripple of positive sentiment from down south but growth has been a much more sober 3%. These markets, say Savills are more likely to be affected by the harsh realities of the emergency austerity budget, and the general economic outlook for the country.
With little prospect of any good economic news emerging over the rest of the year, values to the north of Watford Gap are likely to be soft for the rest of the year.
Porsche picture by Fabio Aro on Flickr used under the Creative Commons license
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A different way of looking at it!! Interesting how far the analogy could go: Top holiday destinations? Top jewelers? Top restaurants?