London is not in a property bubble, says Zoopla boss
Alex Chesterman says London ought to be a more expensive place to live
House prices rise to ten times average salary
Data from the Office of National Statistics last week showed London house prices surged 18.7pc in the 12 months to April, while national UK values rose 9.9pc Photo: REX
By Andrew Cave
London is not in a property “bubble” and ought to be an even more expensive place to live, the boss of the property website group Zoopla has claimed.
“Talk of a bubble is premature because it implies that people are acting in a way that doesn’t make sense and that prices are unsustainable,” said Alex Chesterman, the group’s chief executive.
“You have to look at London in a slightly different light. It’s a market that has finite supply and enormous demand that has driven prices to a level that makes London very expensive but that doesn’t necessarily mean it is not sustainable.
“Bubble is a word that implies it is about to burst. I wouldn’t say that’s the case. If you compare London to other cities around the world, actually it’s not the most expensive city in the world and maybe it should be. As a Londoner I certainly think it’s the best city in the world.”
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Data from the Office of National Statistics last week showed London house prices surged 18.7pc in the 12 months to April, while national UK values rose 9.9pc.
Mr Chesterman said that outside London house prices were only just getting back to their level in 2007, while transaction volumes remain substantially down on a decade ago.
“We’re not in a world today where there are irresponsible lending practices driving prices,” he said. “In the broader market, we’re not seeing house prices or price earnings ratios at record highs.” Zoopla, which owns websites including PrimeLocation, SmartNewHomes and HomesOverseas, was valued at £919m when it floated on the London Stock Exchange last week.
Mr Chesterman, who retains a 4pc stake worth £36m at the flotation price, said he did not consider pulling or delaying the float due to the jittery state of the initial public offerings market.
The entrepreneur who founded Screenselect, the precursor to DVD rental website group Lovefilm, in 2003, set up Zoopla in 2008 with a belief that the property market was inefficient and required consumers to do too much “heavy-lifting”.
Zoopla holds 20m historic transaction prices dating back to 1995 and provides valuation estimates for every property in the UK. The group advertises more than 1m properties for sale and rent from 90pc of Britain’s estate agents and developers, receiving about 45m visits a month to its websites in the first six months of 2014 – 37pc up on the same period of last year.
Zoopla and rival Rightmove face potential competition from the Agents’ Mutual, a rival online offering being set up by property agents.
Analysts estimate that almost £30m could be stripped off Zoopla’s revenues if the Agents’ Mutual signs up 5,000 branches, should those branches then choose not to list on Zoopla’s portal.
However Mr Chesterman said Zoopla’s services are complex, with particular barriers to entry in the databank operations.
“No one has chosen to replicate it,” he said of the company’s property values database. “We spend a lot of time constantly evolving it, building very complicated proprietary algorithms to do this.
“Also, over the last six years we have collected over 120m unique data points about properties in the UK from our users on about 10m homes. It’s hard for someone else to play catch-up to that.”