What does this slice of classic 1970s cinema have to do with London’s property market? To jog your collective memories, it depicted a Utopia for the young, with each member of society given an implant which lit up red when they reached their 30th year and had to leave the city forever.
But what can age tell us about property prices and demographic shifts in the here and now? Looking through the platform I came across this interesting heatmap. It shows the median age of the population in and around London by postcode. Notice how East London is a shade of blue? There appears to be a near 5 year age difference between the east side and west sides of the city. For example the average age in Bow is 31 years, whereas in Hammersmith it’s 37!
That’s a general trend that most of us would identify with being true, but looking deeper I found that the youngest parts of London were around the former Olympic Park, and Stoke Newington, with a median age of just 28. On the other side, the eldest area within 20 miles of central London was Tadworth (South West of Croydon), with a median population age of 47.
Other than being just an interesting division on a map, what is the most useful thing we could we do with this kind of information? Well, the largest proportional increases in personal income occur between the ages of 29 and 39, with incomes tending to then hit a maximum and plateau at around 48 years of age. Perhaps having people in that 29-39 age range moving to one specific area (with their rapidly rising spending power) could be a good leading indicator of property value changes, their ability to invest more driving up prices? Whilst people don’t tend to stay put for that long and may move to entirely different areas, it seems a reasonable theory to explore!
With this in mind, I went back five years to 2013 and found the youngest areas I could see then, which turned out to be Poplar (E14) and Thamesmead (SE28), which at the time both had a median age of 30. They’re currently both sitting at 31, which is interesting, as it indicates that the same people haven’t lived there as they got older, but moved elsewhere, and were replaced with new younger people, otherwise the median age of these postcodes would now be 35.
On the other side of the coin, I found North Sheen (TW9) and Chelsea (SW3) which both had average ages of 39 (interestingly they are both still 39 today!)
Now let’s see how prices changed in those areas over the past five years and if the age of the population might be a correlated leading indicator of that change in values. Drum roll please…..
To save you squinting and trying to do the math yourselves, here are the general results.
The ‘Young’ areas from five years ago outperformed the ‘Old’ areas by a ratio of 2:1. Does this conclusively prove that real estate prices go up in areas where there are more young people? Probably not. However it is definitely something worth looking out for, and in five years time if investments in the areas mentioned at the start have worked out well, then remember REalyse!
© Treex 2020