HOW many UK seaside resorts claim to be “Chelsea-on-Sea”? There are at least a dozen in Cornwall and Devon alone. One of them is Salcombe – where I was holidaying last week, and which has more Chelsea 4x4s clogging up its narrow streets than SW10.
This may not be relevant to you, but a couple of observations struck me, which are probably worth having a think about as you make your way to the City on the District line today.
I never can resist a peak at local property prices when I’m somewhere nice. And prices down in Salcombe are stratospheric. A detached six bedroom house is asking for offers in excess of £5m. Elsewhere, a five bedroom semi is on the market for £3m. These are at the top end of local prices, but are indicative of a niche housing market that has only ever gone one way: up.
Yes, there is a lack of supply and a host of potential buyers who will always want to have a second home here regardless of the broader economic landscape. But those prices are surging without any international buyers distorting the market, unlike in South-West London.
Sure, it’s a wonderful place to stay, especially when the sun is out and the sailing is good. But is the Salcombe property bubble also being propelled by fear? A fear among wealthy Brits that deposited cash is next to useless for return these days, and a fear that in a worst case scenario the really rich will lose most of their money if we get a repeat of Northern Rock et al? Once again, Englishmen are retreating to bricks and mortar for safety.
Think about it. The lucky few holding seriously big cash sums now have spent the last few years terrified that the banking crisis will rear its ugly head again. And, as shown in Cyprus, big deposit holders could be the next in the firing line if and when the authorities admit they’ve run out of firepower in the next European hot spot. Who wouldn’t want an over-priced Devon cottage if we get more incompetence in the handling of Europe’s economy.
Hysteria? Maybe. Doom-mongering? Not really. It’s how the super rich have always held on to their money throughout the generations: owning assets and having a healthy distrust for the banking system. So just remember there are two reasons why people buy property at inflated prices – confidence and fear can go hand in hand.
Finally, the author of this article would like to point out he does not own an expensive second home in Devon. He is merely a wannabe, perhaps like some of you riding the tube this morning.
Steve Sedgwick is anchor on CNBC’s SquawkBox Europe.