to think thank god the London property bubble is looking like bursting

[lexiepix]

www.property-time.co.uk/news/Featured-News-227/articles/Latest-Index-Shows-London-Housing-Bubble-Has-Burst-111171.aspx

Its been long overdue and the lr figures for the last few months show that pretty much all of inner London is falling. I know some will have pain from this, but its been waiting to happen for ages and the longer it inflates the worse the pop will be.

For what it's worth I don't live in London, but I think when they do pop the whole country will be better off. When I was working in London most of my older workmates were on about the UK average pay (22-30), but living in property worth between 500-800k, and calling a 300k one bed flat "cheap"

Sorry I do not understand 'can't afford to live in it'. Couldn't really afford to buy it is nearer the truth. Made nothing on the rent. I don't get this either. This is just crazy thinking and the sooner a price crash comes the better. When I read stuff like this. It's just perpetuating a mad system. IMHO. If you buy a property to let it's an investment. So it's a risk.

London needs more social and affordable housing. The "right to buy" following decades of underinvestment in Georgian and Victorian housing stock by councils was a perfect storm.

A generation of tenants made a one off profit to the detriment of their children and grandchildren who can now not afford to live in their family neighbourhood.

There is a bit of mixing up the debate on this thread. London and the rest of the UK are connected, but London has an almost separate economy. It shouldn't but it does.

The house price insanity in London is because of:

• cheap finance (mortgages and low interest rates)
• investment in residential property (buy to let, overseas money looking for safe havens, developers and speculators, etc)
• very limited space for new building until planning rules are relaxed for everyone

The effect of higher rates of stamp duty and a mansion tax will be completely ignored by a key demographic behind all of this - those that can easily afford the stamp duty and mansion tax. Neither of these taxes will have any material effect on the London property market or the pace of it's price inflation. Of course, both taxes have a massive effect on people that can't afford paying £250,000 in stamp duty to move from one side of London to the other etc etc, but no one seems to care about that small minority of middle waged but now asset rich whilst blindly accepting a policy that will only encourage more wealth and property investment to "take over London's freehold".

The irony is that Labour and LibDem property taxing will entrench Conservative voters in the Capital - a sort of economic cleansing.

I could start ranting about how not only has it been a long term political mistake of both parties to accept the privatisation of railways, healthcare and housing, but you wait - education and police are next .... it's a long sleepwalk into capitalism and corporate rule (dressed up as fake consumer power).

YY Vivienne.

"Made nothing on the rent after costs"

Made "nothing" but increased equity, which is highly valuable.

So the proposition is that we pave the whole county and build on it?

That'll work just fine.

Many BTL mortgages are interest only, so yes people may have made nothing.

Viv: using my daughter as an example: when she bought she took a risk 2 years ago that prices would crash. The previous owners of her flat made about £5k over 7 years of ownership in London which is amazingly low! She could have bought and then prices crashed but she wanted to buy in her 20s as early as she could and will own a property presumably until she's about 90 so over that type of ownership span for most of us it makes sense to buy if we can.

As for not affording to live in it, she lived at home for some of that time and I did not charge her rent and the rent covered her mortgage and tenant repairs. She was very lucky that over those 2 years it seems to have gone up £70k which is a fairly pointless gain because she doesn't plan to see but still better than facing a loss. It also proves I am right to encourage all the children to buy as young as they can whatever it takes, even if it makes life very hard for a few years and stops them going for meals out etc. as on the whole over the last 80 years that has been a sensible strategy. The fact inner London prices might well stagnate or even drop 20% in the next few years does not change my view as most of us own a property for the long haul.

Jilly, so buy whatever the asking price. Skipping a few meals and not buying an iPhone is NOT going to get you any close to buying in London or SE, against these joke sicko house prices of today, that need to crash.

Will she own that starter property until she's 90? Because house prices going up £70K makes larger homes, for families, a lot more unaffordable. The gap has become even larger if she ever wants to trade up. Her flat may have gone up £70K, but a 3 bed house probably gone up £120K over the same time period. Get her to trade up now, go onnnn encourage her. Lots of others have. Now they're carrying even more debt on top of their profit. All set up for HPC. Blood in the streets HPC where owners and BTLers die in shock from the losses from a correction back to fair value.

Forgive me if I don't care less about all the young you encourage to buy at stupid prices when prices collapse and they've bought or upsized with huge levels of debt. I will be LAUGHING at them, positioned to buy at much lower prices.

Also I have my eye on prime houses. Prices can fall for the long haul too. Don't blame me if you just take your bearings from the last 70 years to form corrupted view that means house prices can never collapse back hard. You're going to find out there's ever fewer buyers in the market willing to pay silly high prices for family homes. Of which too many are being underused by older couples with empty bedrooms.

It's all about availability of credit and demand for credit. And prices go up, and down, by those buying and selling each month. 'Not too few houses for growing population'. The fact there are millions more houses into BTL, and fewer builds per year, is actually a negative for house prices, as it's making this society a much less attractive, darker place to live.

I can't understand the horror at the idea of prices falling when everyone knows they are ridiculously unaffordable. SO some people may not be able to move as soon as they would have liked at least they have a roof over their heads. It is hard to feel sorry for those who already own! There are lots of reduced properties on RM where I live atm compared to none this time last year.

What's going to happen if rents fall and then landlords won't cover their mortgage. I'd like a bigger house but the gap has always been too wide to make it worthwhile moving. We'd lose out on garden and position and so on. And it doesn't help people in starter homes that prices go rocketing. Because it means they can't move up to a bigger property. No. I am convinced a very substantial drop would be the best thing for most people.

Locally the rents are all over the place Absolutely no consistency with what you get for your money as they are usually priced to cover the landlords mortgage! Amateur landlords who are looking for a quick return are a huge problem. I agree a substantial fall is the only way and I think eventually when every cock and bull scheme has been exhausted that is what will happen.

The girls and I are all lawyers so they are on pretty high regular wage increases which has always made trading up possible whereas your average call centre worker with no promotion prospects does indeed find it hard to trade up - that really is a message to all the children of those on the thread - pick good careers and work hard at school as it makes life easier.

I and my daughters know perfectly well prices go up and down. I sold 2 buy to let flats in the 90s for 50% less than we paid for them and have had an owned property for 30 years without a break. I need no one to weep any tears for me but I remain of the view that for all kinds of psychological reasons, for safety, security, continuity never mind financial reasons it makes to sense to buy if you can - not to make a quick profit but to have a home for life. I intend to stay in my house for about 50 more years until I die. As of last year I have no mortgage. I think it was a wise choice to buy all those years ago rather than rent for the last 30 years and I think for my 5 children it will continue to make sense to buy if you can even if we have 20% price falls, even now we are in this fascinating new period where some banks are charging to hold money, when we are deflation and a new ear. i still think it makes sense to buy a home, not rent if you possbily can and not to wait for a big drop because that might not come when you expect it and you might lose out by waiting.

I am a solicitor as well, at a mid size firm, although have recently been offered a senior position at a much smaller firm run by some magic circle older solicitors who have their eyes on retiring in the next 5 years. My husband is a pilot. We rent. Good luck counting your payrises into the future. I suggest you look at having to take paycuts too.

What has happened (last 30 years) does not mean it repeats as making sense against ever higher prices. We rent, waiting for prices to steeply correct.

House prices can fall, as you know, when the market routed out your position back in the early 90s with your investment properties. It needs to occur again. No 20%, but 50% and more as you experienced in the 90s.

We won't be buying at prices of today, under any circumstances. Good luck finding buyers who will. Mortgage demand is sliding, hence banks cutting rates (to sell debt) trying to find last of the buyers.

Virtually no one really is able to catch the bottom of the market when it comes, though. It is riskier to wait to buy than just to get on with it. Anyway good luck with it.

I would be very surprised if in London we get drops of even 20% of current sold prices.

Pay cuts:? Well they can occur, yes, even in law but 30 years ago and now with my daughters that has not been our experience - the big firms tend to increase pay year by year in your 20s and if you make equity partner then obviously it's a big increase too.

Yes we sold the two buy to lets by which time we'd repaid all loans on them and on our last house and sold the flats and our house and put that equity into this house along with a massive mortgage and that risk paid off. It tends to be people who don't take risks enough risks who don't do as well financially in life.

Demand in London vastly outstrips supply, nothing else matters. We are beginning to see only the elite able to afford to buy there. This will continue, renting in london will be the norm. Shame really, but then, there are other places to live...

Sorry, but with this comment I can't help but put my "judgey pants" on (forgive the obvious legal pun).....

"Forgive me if I don't care less about all the young you encourage to buy at stupid prices when prices collapse and they've bought or upsized with huge levels of debt. I will be LAUGHING at them, positioned to buy at much lower prices. " littlecharlie

No empathy, understanding or recognition of economic inequality there. In fact, no "veil" at all. The face of out and out greed and opportunism revealed itself. I don't think revealing you are a solicitor helped either.

I take the commercial view to protect and enhance the financial interests of my clients to their advantage - and take the very same approach to my own position.

Jilly's reasoning is to take risks, with prices as inflated as they are.

At least she has experience of getting it entirely wrong, taking a 50% HPC on two investment properties in the 90s.

She did go on to have 20+ years of HPI on her main home, and expects more of the same. She mentions deflation - not a good time to borrow into deflation, where nominal value of debt increases. My commercial view is to rent, and to wait for better value. We won't be paying the prices you think your homes are worth. Fewer buyers will be doing so. When sellers sell for lower prices, it brings down values for all other homes in the same area. Jilly, your house equity is not cash or money, it's just value, and value which can go down.

Oh. That's OK then. Trebles all round.

I'm assuming that charlie is rather younger than Jilly having just clicked who she is and thus youth will have to excuse the grating arrogance of her posts.

There will not be a house price crash in the UK.
There should be, but there won't.

littlecharlie
Are you suggesting we are going to have another Black Wednesday?
House prices in the 1990s were affected external factors such as the Government trying to stave off Sterling crashing out of the ERM.

Also I have had a look at the Halifax House Price Index
www.lloydsbankinggroup.com/media/economic-insight/halifax-house-price-index/

In Q4 1990 Average House Prices (the peak or close to it)
UK 68895
Greater London 93540

Q3 1995 (the bottom or close to it)
UK 61115 (down 11.29%)
GL 76946 (down 17.74%)

So even in the economic meltdown of the 90's decreases in London didn't hit 20%

TP - arrogance I'm fine with, especially if the substance is solid. I'm not into "form over substance". It was the lack of empathy that got me.

HPC will not let me post on their site, but this graph is worth studying
www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

TP

What do you make of the trend line on the chart? It isn't just rising, but accelerating it's upward gradient. Whilst that's possibly a representation of history, can it really be a prediction that inflation in prices will accelerate?

What say you stat-junkie?

As an aside, but not entirely unrelated to this thread, I've been thinking a lot lately about how certain professions that were once considered dead certs no longer have the cachet or the remunerative prospects they once did. Law, if you're not Magic Circle (or not even, if you're junior at one of the big firms), Medicine, Accountancy, Architecture, Teaching - professions that used to command relatively large salaries along with respect.

It isn't 'right' that we live in a world where people who do the most important jobs are not earning the most money. But if you have been raised with the idea that if you work hard, do well academically and get a certain kind of job then you're set for life (I certainly was) you won't be able to understand just how much money there is in London and how it's coming from new sectors like tech (very useful and exciting) and the free-for-all of the de-regulated finance sector (not immediately useful unless you use your money literally created out of thin air to build a hospital wing).

There is a lot of money flooding London, not just from foreign speculators or dodgy ex-pats, but from actual real Londoners working in new fields, some of which are essentially useless but very lucrative. I keep meeting these people and that's when the penny drops and you realise how and why people pay £2Mil+ for poky terraces. I also know a lot of doctors who are demoralised that after years of study and slog they can't afford to buy even a modest family home within a one hour commute from their workplaces in central London.

This is why I don't think there will be a sizeable crash - because the money and demand is there. Especially at the top end where it's mostly cash buyers who don't care about 12% stamp duty. Mind boggling but true.

The trend line is bollocks - and telling them so is why I'm banned from posting
I dismantled their stats and they did not like it!

littlecharlie what exactly do you think the catalyst for this crash will be? Also, would you mind telling us how long you have been renting for while waiting for it to happen?