Do you think London is in a housing bubble?

[cunningplan101]

The subject is it really ... do you think this is a bubble and prices are going to crash? Or do you think they'll carry on going up? Or flatten out?

[MacademiaNut]

Prices near us (London/Surrey border) have never really dipped. Properties are selling with sealed bids. Estate agents are saying it is due to low stock. We bought at 265 4 years ago and our latest valuation is 425. But this gain is not enough to get a 3 bed in this area which we love. We would only gain if we moved a long way out. So it is not really working for us now.

[MacademiaNut]

I don't think more stock will come on the market here. People are extending to lofts and basements and our back, rather than moving. I can't see it changing.

[Bowlersarm]

I think it's in a bubble. Low supply and high demand. If this was reversed it would deflate. I don't think it will deflate any time soon, though.

[RandomMess]

London commute Surrey here too, prices did dip and they've now gone up past what they were pre-recession. I think they will continue to go up, there is work available down here, rental prices are absolutely shocking - £600 to rent a room in a shared house.

There are some many people in this area who earn such a lot of money that there will people who can afford to buy - gap between the wealthy and poor is very noticable around here IMHO.

Tis supply and demand...

[maggiemight]

I think they will fall back once interest rates rise because at the mo people get low interest loans, buy just to sell in a year or two at a profit, it's a win win situation. If you got more interest money in a savings account that is where the money would go, not housing.

So maybe another year or two. but people don't want to be caught out so once it starts moving it will move fast, but not a huge crash imo. know buggar all about this but then the experts often get it wrong

[cooper44]

It's totally in a bubble but I don't think there's any going back in London. It will obviously calm down at some point.

[cooper44]

Just to add. I've just sold in london. Got way over asking and actually if I'd put it on the market now it would have made much more I think. I was amazed at the amount of cash people had. All the sealed bidders -six of them - had over 60% cash and some much more so Even when rates do go up I'm not convinced that these kind of buyers are going to massively feel the pinch.

[maggiemight]

A friend's DD is trying to buy in London, just keeps being unsuccessful, the offers have to be much higher than the asking. Scary really.

[AClassyMove]

I don't think prices will drop very much at all in London, the growth will slow down as interest rate increases take hold.

[lessonsintightropes]

There's a massive lack of supply and a very small and slow increase - what is being built is being sold off-plan in the far east without even being marketed to London buyers, and it's getting worse. A friend of mine is a development manager for a newbuild scheme in Hammersmith not even started on site yet. Mostly sold, including two penthouses being knocked together for £20m. Makes my 100k increase for a 2 bed maisonette in a scruffy area of SE London in 2 years look almost reasonable...

I can't see how it can go backwards when property here is being used as a safe haven for foreign cash and mostly lying empty at the top end of the market. I do think growth in prices will slow once interest rates slacken off demand and stupid lending (one lender offered us 6 x income on a 20% deposit - ludicrous) will end once the rules tighten in April. Scrapping Homebuy here would help. I think it's ridiculous but that we all have to play the market - it's like musical chairs, you don't want to be standing up when the music stops (iyswim).

[Arohaitis]

Of course it is, has been for years, but it is gov furled/engineered/desired

London has crashed before, in my memory and I am really not old!!

[Arohaitis]

Fueled

[Forago]

Also london\surrey borders. Bought 2y ago at 560k, just been valued at 735, crazy stuff.

[AgaPanthers]

Prices up 25-50% in 2 years on already high prices. And not just cash buyers in prime London, ordinary semis and terraces in quite rough areas of towns around the home counties. The people living in these areas are not loaded, there are rusty caravans in the driveways, not brand-new BMWs.

Definitely a bubble, the question is how long the government can prop it up for.

General election next May, Tories trying to stoke things up for that, they have been succeeding to a great degree, but should still lose. But is Milibland just Blair lite?

[lessonsintightropes]

Aga the problem is though the imbalance at the very top of the market (and massive political unwillingness on every side to do anything about it) has a big inflationary factor on the rest of the market, so unless this issue is resolved we'll continue to have the structural issues of lack of supply etc. Yes a bubble and yes a bad thing - but I don't think there's an appetite from any party to resolve it.

[AgaPanthers]

I don't see how it's a supply problem really. We don't have a huge homeless population. We have homes, they are just too expensive.

[lessonsintightropes]

Erm actually Aga as someone who's worked in homelessness in London for the last 15 years I have to disagree with you.

Thousands of families in unsuitable B&B accommodation for years.

Rough sleeping increasing by 25%.

Youth homelessness increasing by nearly double that.

Thousands of single homeless people stuck in hostels with no low cost housing alternatives to move them onto when they finally get some qualifications and a job.

Thousands more living illegally in sheds in Brent and other outer London boroughs.

Average age of FTB now 41.

We have a huge supply problem and the burgeoning BTL situation (gone from 10% of stock to about 25% of stock in most inner London boroughs in the last five years).

[AgaPanthers]

Government says otherwise on homelessness. www.gov.uk/government/uploads/system/uploads/attachment_data/file/286786/Statutory_Homelessness_4th_Quarter__Oct_-_Dec__2013_England.pdf

BTL is a problem but what it does is more force people into homes that suit BTLers (since they influence supply) than make people homeless.

Illegal sheds are more of an immigration issue IMO.

Average FTB age unclear. Couldn't find official stats. Lots of different numbers from shitty surveys.

However the private rental sector has more than doubled in size, and mortgage holding owner occupiers shrunk. Basically without equity from earlier house price inflation, or mega salary you are stuffed.

I feel the biggest issues are low interest rates, help to buy, and sentiment that prices always go up. Fundamentally nearly everyone has a home, it's just that the prices are too high.

[lessonsintightropes]

Have you had a look at that trend information over a four year period - despite this quarter.. source source

Changing the vulnerability criteria doesn't mean it isn't happening.

Just think you are wrong on this, sorry.

[lessonsintightropes]

I'm too tired and it's too late, but I will post a lot of source material tomorrow. This is a huge problem but it's not in the interests of the political class to really do much about it.

[Monty27]

The interest rates are going to rise soon. The new buyers will be in negative equity and handing back keys. Just like the 80/90's sigh...

[Nottheshrinkingcapgrandpa]

But if they do go up, it'll be very slowly and unlikely to happen until after the election next year.

[crazyhead]

I can't imagine a massive drop without something influencing supply - babyboomers going into retirement homes/dying all at once, change of rules on BTL, proper investment in other UK cities or a programme of building.

There are just too few houses for the buyers at the moment. The generational inequality it is causing is amazing, 45 year olds at my work are so much richer than 25 year olds will ever be able to be in the same job. I can't how see my younger colleagues will ever be able to have kids in London

[fromparistoberlin73]

I think its overhyped frankly

London is HUGE and has a massive tranche of suburns which remain affordable