Charlotte Street Partners



A housing market of cards

Written by Scott Reid, associate partner 
Edited by Kevin Pringle, senior partner
27 January 2022

Good morning,

In Toronto, where my family lives and where I was lucky enough to spend the holidays, a housing affordability crisis for the young is reaching fever pitch.

Taking together, the good quality of life and a spot in one of the gleaming apartment towers overlooking Lake Ontario, you can see why; everyone wants a piece of the action. But with the average house price now nearing $1.5m, increasing some 25% in the last year alone, a Hunger Games-style competition for property is underway in which only those with the deepest pockets win.

Indulging my morbid fascination with the sheer unaffordability of the place a little further, I pass on some harrowing figures from a CIBC Economics report picked up in conversation with my brother. Take, for example, that the average gift from the Bank of Mum and Dad to first-time buyers in the city now tops $130,000 (£76k), used by roughly one in three to afford a deposit. Or that, with a lucrative five per cent commission fee, Torontonians are now moving in droves to become estate agents, equating to roughly one in every 88 people who work in the city – more than the number of teachers. And worse yet, based on the combined trajectory of house price and wage rises, that we are five years from the point where it will be mathematically impossible for the median household to even save for a deposit during the course of a working life.

I mention Toronto, not for being exceptional, but because it is an ominous sign of things to come for many large cities in the West. In Scotland, the letting portal DJ Alexander reported yesterday that average home prices rose by 21.3% between March 2020 and November 2021, beating a UK average of 16.3%. Indeed, house prices in Edinburgh, too, are also set to hit ten times the median salary, according to Rettie & Co.

Writing in today’s Financial Times, Neal Hudson suggests there are no silver bullets to the so-called “financialisation of housing”. Although likely interest rate rises in the months ahead may curb prices, the knock-on effect to mortgages would make them that much less affordable to first-time buyers. And for those wishing a rapid market crash in property values of, say, a third: be careful what you wish for. Bubbles also impact employment and potential earnings. Besides, based on current rates, we may be back to where we started in a mere 18 months.

For radical solutions, look to Berlin. Last year, the city voted in favour of a landmark referendum for the council to expropriate properties owned by large corporate landlords – essentially, socialising housing. The campaign targeted companies, often single landowners, holding 3,000 or more apartments which, following the passage of the referendum, will gift the council some 240,000 or 11% of all properties in Berlin for affordable sale.

While the intervention may seem heavy-handed and Berlin’s case study is in its early days, I sense the alternative costs and associated drag on life opportunities will be simply too much for voters to stomach as we accelerate out of the pandemic. Toronto offers one dystopian vision for the future, but Berlin may come just after that.


The Duke of York has demanded a trial by jury in the sexual assault case brought against him by Virginia Giuffre. In an 11-page document sent to the court in New York yesterday by his lawyers making the request, Prince Andrew denies the allegations although admits that he met paedophile Jeffrey Epstein “in or around 1999” and was close friends with sex trafficker Ghislaine Maxwell. One of the 11 defences set out by Andrew’s legal team include that Guiffre’s claims are barred by “her own wrongful conduct”.

The US has formally denied a request by Russia for the possibility of Ukraine’s membership of Nato to be barred. Delivered in coordination with Nato, secretary of state Antony Blinken gave no concessions to Russia’s demands but offered “a serious diplomatic path forward”, while reaffirming its core negotiating principles, including Ukraine’s sovereignty and its right to choose international alliances. The US also warned that the Nord Stream 2 pipeline between Russia and Germany would not proceed if Russia invades Ukraine.

Stephen Breyer, a liberal member of the US Supreme Court, has signalled he will retire later this year leading to the nomination of a new justice by president Biden. Breyer, 83, who was first nominated by president Clinton, will step down at the end of the court’s current term in June following pressure to make way for a younger justice in an effort to preserve current liberal votes on the bench.

Business and economy

The ONS will provide a more detailed breakdown in its calculation of the cost of living following a campaign by food writer and activist Jack Monroe to better reflect the impact of inflation on poorer households. The new Vimes Boots index, named for the Terry Pratchett character who posited a theory of socioeconomic unfairness, will take account of choice among single grocery items based on different lifestyles.

Tesla has announced record annual profits following a surge in demand for electric cars during 2021. Compared to last year’s figures, full-year profits were over seven times higher at $5.5bn, sales grew 71% to $54bn and deliveries increased by 87%. In the UK, Tesla sold 936,000 cars as its Model 3 became the second-most popular vehicle nationwide and the most popular EV in Europe.

The US Federal Reserve has paved the way for a series of interest rate rises after announcing the move “would soon be appropriate”. The bank is under pressure to curb inflation as prices in the US rose at their fastest rate in 40 years. Analysts now expect a rate increase in March, the first since 2018.

Columns of note

A New Statesman feature by Anoosh Chakelian and Michael Goodier explores the growing roles of salary and income in determining class in the UK. Based on a UK-wide study of 1,500 voters, the authors found that regular holidays and meals out, and private school education, were the biggest indicators of upper class; shopping at Waitrose or M&S and financial resiliency signalled middle class; and a lack of inheritance and flying with EasyJet or Ryanair were markers of being working class.

Also in the New Statesman is a profile of Labour MP Wes Streeting as a potential leader of the Labour party. On the right of the party, whose background includes being council estate-raised, gay, Cambridge-educated and involved in trade union activities, author Ailbhe Rea suggests Streeting represents more than “rehashed Blairism” or at least, “Blairism in a different context”.

And in The Times, David Aaronovitch celebrates the quiet explosion of the podcast in recent years. He suggests that no other medium can be as intimate for a 21st century audience – universal in subject matter, access and convenience. Rather than an invention of government or industry, the podcast has responded to people, growing organically in response to their preferences.


What happened yesterday?

Optimism in the energy and travel sectors drove the FTSE 100 to a strong performance yesterday, ending up 1.33% at 7,469.78 points. Shell (5.6%) hit its highest levels since February 2020, with BP also in the black. Travel stocks IAG (7.39%), InterContinental Hotels Group (2.8%), Whitbread (2.36%) and engine-maker Rolls Royce (2.57%) each benefited from loosening travel restrictions.

Elsewhere, the S&P 500 (1.26%), DAX (2.22%) and CAC 40 (2.11%) were all up as investors held their breath ahead of an expected rate rise by the Federal Reserve next month. Sterling also made gains of 0.1% on the dollar at $1.35 and 0.28% on the euro at €1.20.

In company news:

  • The CMA announced it would lead an investigation into the National Express takeover of Stagecoach Group that, if successful, would create a company valued at £1.9bn.
  • Citigroup committed £100m to a revamp of its City office, home to 9,000 London-based staff who have been asked to return to the office for at least three days a week.
  • Boeing suffered a third annual loss of $4.5bn as supply chain disruption triggered delays to its deliveries of the Dreamliner jet.
  • And this morning Diageo has posted a 16% rise in first-half sales, with operating profits increasing by 22.5% to £2.7bn

What’s happening today?


Idox Group

Redx Pharma






Ig Group Holdings

Trading announcements

Pphe Hotel

Empresaria Group


Intermediate Capital




Polymetal International

Fuller Smith & Turner




Abstd Asiafocus

Botswana Diam

Home Reit


Critical Metal



Sunrise Res


Intl economic announcements

(13:30) Continuing Claims (US)

(07:00) GFK Consumer Confidence (GER)

(10:00) Services Sentiment (EU)

(10:00) Economic Sentiment Indicator (EU)

(10:00) Business Climate Indicator (EU)

(13:30) Initial Jobless Claims (US)

(10:00) Industrial Confidence (EU)

(15:00) Pending Homes Sales (US)

(13:30) Durable Goods Orders (US)

(13:30) GDP (Preliminary) (US)

Source: Financial Times

did you know

In order to test in-flight wifi, Boeing fills their planes with potatoes as they interfere with signals the same way as the human body. The project was called Synthetic Personnel Using Dialectic Substitution, or SPUDS for short.

Source: @qikipedia

Parliamentary highlights

House of Commons

Oral questions

Environment, Food and Rural Affairs (including Topical Questions)

Church Commissioners and House of Commons Commission and Parliamentary Works Sponsor Body and Public Accounts Commission and Speaker’s Committee on the Electoral Commission

Business Statement

Business Questions to the Leader of the House

Select Committee Statement

The Eigth Report of the Digital, Culture, Media and Sport Committee, the Draft Online Safety Bill and the legal but harmful debate, HC 1039

Backbench Business

General debate on Holocaust Memorial Day 2022

House of Lords

Oral questions



Nationality and Borders Bill – committee stade (day 1)

Orders and regulations

Revision of the Highway Code – motion to regret

Scottish parliament

General questions

 First Minister’s Questions

Members’ Business

Holocaust Memorial Day to be Marked on 27 January 2022

Support for the 70/30 Campaign to Reduce ACEs by 2030

Portfolio Questions

Education and Skills Stage 1 Debate

Budget (Scotland) Bill

House of Lords 

Oral questions
Reforming the UK’s water industry
Increasing the proportion of rape allegations that go to trial
Regulating the disposal of wet wipes
Military and non-military support to the government of Ukraine to deter the threat of an invasion by Russian forces
Police, Crime, Sentencing and Courts Bill – third reading
Dissolution and Calling of Parliament Bill – committee stage

Scottish parliament 

First Minister Statement
COVID-19 Update
Stage 3 Proceedings
Transvaginal Mesh Removal (Cost Reimbursement) (Scotland) Bill
Committee Announcements
Members’ Business
S6M-02730 Jackie Dunbar: My Breath is My Life

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