12
MONEY
D
anielle Jenkins would have
loved to buy a place in Amer-
sham. The maths teacher,
26, who teaches in the Buck-
inghamshire town and grew
up in nearby Chesham,
enjoys having the country-
side on her doorstep and
misses the view from her
old bedroom window at her
parents’ house.
When she got together with her fiancé,
John, in 2017, they were both still living
with their parents and desperate for their
own space. As Jenkins started teacher
training in 2019, she was given a bursary,
which helped the two of them get on the
housing ladder in January last year when
they put down a deposit to buy half of a
£250,000 two-bedroom shared owner-
ship flat. It’s in Hemel Hempstead, 11
miles away.
They love it. But it’s not where she
works, nor where she grew up. As first-
time buyers there was not much they
could afford in Amersham or Chesham.
“When browsing for houses there
were never any properties within our
price range. We could just about afford a
one-bedroom flat in Chesham, but it
would have been much smaller than we
have now and we really wanted two bed-
rooms.”
Jenkins is not the only one finding her-
self priced out of the area. Many peopleAmersham sums
up the property
conundrum in the UK:
homeowners don’t like
new estates, but their
children need homes,
finds George Nixon
The town
that shut
the door on
first-time
buyers
want to live in places like Amersham — it’s
at the end of the Metropolitan under-
ground line and central London is just
40 minutes away. It has excellent
schools, a buzzy nightlife and country-
side on the doorstep.
Last year 21 per cent of Britain’s
392,980 first-time buyers bought in the
southeast of England, according to the
banking trade body UK Finance.
In the six years since March 2016 the
average first-time buyer price in Bucking-
hamshire has gone up 25 per cent to
£345,717. According to PropCast, a prop-
erty market analyst, 58 per cent of the 197
properties on the market in Amersham
are under offer, a sign of a seller’s market.
In Chesham, it’s 63 per cent of the 284
properties.
Amersham is just the kind of town
where the Conservative government
seems to think that its drive to push banks
into more lending will bear fruit for first-
time buyers. It is also a constituency
where last June, for the first time in
almost half a century, the Tories lost their
seat to the Liberal Democrats, in a protest
over their housing policies.
Last week, the housing secretary,
Michael Gove, said he had concerns
about the poor quality of new homes and
that he would prioritise “beauty,” and
give local residents more of a say over
developments in their area.
But he also said that banks needed to
make it easier for first-time buyers to get
mortgages.
A senior figure at one high street bank
said: “We don’t want to go back to pre-
2008 levels where we’re loading people
up with debt. Absolutely the wrong time
to lend more money is when interest
rates are up and there’s high inflation.”
Gove is said to be looking at a plan that
would mean borrowers with smaller
deposits would have to take out an insur-
ance policy alongside their loan to cover
the bank if they fell behind in their pay-
ments.
Mortgage indemnity guarantees,
where borrowers pay monthly insurance
premiums alongside their mortgage,
have been tried before, but were shelved
after being blamed for causing excessive
borrowing, which ended up fuelling a
house price crash in the early 1990s that
cost insurance companies £3 billion.
They are still used in Canada, where bor-
rowers taking out a mortgage for more
than 80 per cent of the value of their
home have to take out insurance.
The government has already launched
a mortgage guarantee scheme, which
allows borrowers with small deposits to
get some of their loan underwritten by
the government, thus protecting the
bank if they default. It has boosted the
number of loans available at 95 per cent
loan-to-value (LTV), which had all but dis-
appeared during the pandemic. The
scheme was used to underwrite 12,388
loans between its start in April last year
and December.A town of two halves
There are 11 estate agents on the highstreet in Amersham. In the window of
one is a two-bedroom flat for sale at
£400,000, another has a three-bedroom
terrace next to a jewellery shop for
£600,000.
They’re lovely, but expensive. The
kind of prices you’d expect to pay in an
inner London borough.
On Tuesday night, there’s a steady
trickle of people leaving the railway sta-
tion. It has been a hot day, and though it is
now threatening to rain, people sit drink-
ing at the tables outside the The Mad
Squirrel pub. This part of town, known
locally as Amersham on the Hill, is the
more modern half. There’s a Waitrose, a
Domino’s pizza, a huge Majestic Wine
and an Italian deli plus a block of new
flats above a FatFace. They were com-
pleted in 2018, but took up to 11 months to
sell, partly because they were too highly
priced for first-time buyers (they have
been listed and sold for £420,000).
The lower part of town dates back to
the Domesday book. Down here is The
Crown Hotel, which featured in Four
Weddings and Funeral and is now a posh
curry house, and many more older cotta-
ges, but there is also a new development
of four-bedroom homes called Diamond
Court, which was completed in 2016. It
sticks out like a sore thumb. It wasn’t built
with first-time buyers in mind and prop-
erties were priced at about £700,000.
:Danielle Jenkins and her fiancé John have been priced out “For the past 30 years the propertyC
onsumers
suffering under
the soaring cost
of living can
scarcely be
expected to care,
but India’s ban
on wheat exports
heralds an
inflationary new
world order for investors.
Wheat is trading 58 per cent
above where it began this
year after the world’s second-
biggest grower of this
commodity, essential for
bread, said last week that its
own food security must come
first.
After several decades in
which some developed
economies helped emerging
markets to survive occasional
famines, this represents a
profound reversal of
fortunes. Unfortunately for
us, it is happening while
Russia’s invasion of Ukraine
hits wheat exports that used
to account for 30 per cent of
the global total and while
droughts are afflicting
farmers as far apart as
America, France and India.
Closer to home, Andrew
Bailey, the governor of the
Bank of England, shocked
MPs on Monday when he told
them that Britain faces an
“apocalyptic” rise in the cost
of living. Last August he
claimed inflation was
“transitory”.
Here and now the
Consumer Price Index (CPI)
measure of inflation was at
9 per cent for the year toover 3 per cent, compared
with their current 1.9 per
cent, primarily because ADM
has distributed dividends
without fail since 1932 and
increased shareholders’
income every year since 1981.
By this week, the price had
grown to $87, when I bought
some more before the shares
went ex-dividend on
Tuesday. ADM is now my
fifth most valuable holding.
Priced at less than 16 times
corporate earnings, they
don’t look too expensive to
me. Big ADM shareholders,
including the world’s biggest
fund manager, BlackRock,
and the biggest sovereign
wealth fund, Norges Bank,
seem to agree.
Elsewhere, Deere (DE), the
world’s most valuable maker
of tractors and combine
harvesters, is even more
important to me. Founded in
1837, it has paid dividends
without fail since 1987 and
was part of my
“forever” fund
when I first
invested at $82 in
November, 2013. It is
now my second-
biggest holding and,
despite extreme
volatility, traded at
$322 on Friday.
Less happily, such
strong growth has
squeezed Deere’s
dividend yield to a
modest 1.2 per cent
and the shares are
priced at 20 times
earnings. But I believe
these valuations can be
justified by strategic
investments in new
technology to make
farming more efficient.
For example, global
positioning systems
(GPS) and the fact that
fields are less crowded
than roads, mean the
world’s first truly
self-driving vehicle is far
more likely to be a Deere
tractor than a Tesla motor
car. Last month new
technology enabled Deere
to remotely disable
combine harvesters worth
$5 million that Russian
soldiers stole from
Melitopol in Ukraine and
took home to Chechnya
before they found they
could not switch them
on. Tough luck, tovarich!Similarly, the Ukrainian
government claims 400,000
tons of grain have been
stolen from occupied
Luhansk, Donetsk, Kherson
and Zaporizhzhia, about a
third of the total that was
stored before the war.
Lyudmyla Denisova,
Ukraine’s human rights
ombudswoman, argues that
Russia is trying to create a
new Holodomor — the Great
Famine caused by Soviet
incompetence and
indifference which caused
ten million people to starve
between 1932 and 1933.
On a personal level, and
more positively, food
remains a major theme of my
forever fund. Other exposure
is gained through my top ten
holdings, Unilever (ULVR),
which makes everything
from Magnums to Marmite;
Nestlé (NESN), the world’s
most valuable food company;
and McDonald’s (MCD), the
fast food giant that
announced its retreat from
Russia last week. Will this
make Moscow a “no fry
zone”? More seriously, these
three shares yield 4.2 per
cent; 2.5 per cent and
2.4 per cent respectively.
Sad to say, I don’t expect
the fundamental problem
of demand exceeding
supply to be solved
soon. Food will never go
out of fashion; people
will always need to eat.
That makes this sector a
source of comfort in an
increasingly uncertain
world.
To return to where
we began it was only
last month that
Narendra Modi, the
prime minister of India,
pledged to fix shortfalls
in soft commodities
caused by the war in
Ukraine. He said: “At a
time when the world is
facing a shortage of wheat,
the farmers of India have
stepped forward to feed the
world.”
What a difference a few
weeks make. That was then
but this is now, with drought
and war squeezing supplies
lower and prices higher,
prompting the export ban.
Most of us will be among the
losers from these events but
investors can also gain some
exposure to the winners.April and the less official but
more realistic Retail Price
Index (RPI) hit 11.1 per cent. It
will take eight years to halve
the purchasing power of
money at the former rate,
and less than six years at the
latter.
Everyone will experience
higher food prices, which
look set to leave consumers
with less to spend on other
things. That’s bad for most
individuals and investors but
a few contrarians may find a
silver lining in this cloud of
dismal data. For example, I
wrote here in August last year
about how “investing in
companies with substantial
exposure to agricultural
commodities can help to
protect our life savings from
food price inflation and the
rising cost of living.”
To be specific, I reported
topping up my investment in
Archer Daniels Midland
(stock market ticker: ADM) —
one of the world’s biggest
traders in corn, soybeans and
wheat — at $59 per share.
I first invested at $42 in May
2016 when they were yieldingIan Cowie
Personal
Account
Time to sort
the wheat
from the chaff
$83
The price of Archer Daniels
Midland shares on Friday
that Cowie bought for
$42 in May, 2016