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"

Another thing people overlook is that most London families now have two earners, which is a big change from 20 or 30 years ago. We looked at moving out but apart from the inconvenience, for both of us to commute would cost a fortune - about 16 grand a year, which at current interest rates is a lot of mortgage. So we're still here.

I don't understand why it's so expensive.

My friend bought her shitty flat in London for £80k ish back in 1995. She's just sold it for £400k. It was a 2 bed, above a shop on a very busy road (can't remember where but obviously somewhere commuter desirable!!)

Meanwhile, I bought a stunning brand new 3 bed penthouse apartment 'up north' for £165k back in 2004. Then the market crashed, and I've just had to sell it for £115k.

So, I've lost a gutting 50k - which was my entire cash deposit. Meanwhile she's made an enormous sum of money.

She actually told me that my flat, if it was where she lived, would be worth in excess of £1.5million. FOR A FLAT!!!

It was stunning, especially in comparison to hers (3 bed, 2 bath, large rooms etc) but no flat should ever be worth that sort of ridiculous money - not when the same property is worth £115k 250 miles further away.

However, I wouldn't wish a crash on anyone. It's happened to me, and it's not pretty.

I think it should gradually reduce down to more sensible prices. The winners are only people like my mate who bought back in the 90's. How the hell anyone buys down there now is beyond me.

Things are worth what people will pay for them. if mortgage costs are 2% not 3% or 6% (they were 6% when I had a £1.3m mortgage) or the 12% we used to pay then house prices stay less. Once the interest rates are a sixth of what they used to be people can afford to buy more expensive places so prices rise.

(I missed a "not" in my post above- most people including us could not afford to buy right in the centre of London 30 years ago nor now and by the way even 30 years ago you needed 2 professional salaries (we both worked full time) to buy our outer London house 30 years ago and in my parents day they both worked full time for a decade before they bought in 61. Go even further back and most people never bought. My grandfather left school at 12 and in 1901 was living in a boarding house for clerks with 21 other young men in bunks.

Even in London you get crashes, We sold two buy for let flats in the 1990s for 50% less than we paid for them.

So Draylon, my infertility should be taxed? Thanks for that.

Actually, in some ways. more of 'the pain' is being felt in those one-hour-out-of-London locations where London Money is driving the locals out

God yes. House prices where we will (St. Albans - we only live here because DH's otherwise-poorly-paid job comes with a house) went up 25% between 2013 and 2014. It is unreal.

Of course prices will crash. And of course that's both necessary and desirable. It won't affect people who currently own - they can go on living there whether the price goes up or down - but it will benefit everyone who is currently priced out, it will lower rents, as they are connected to house prices by potential yields, and it will free up lots of cash to spend on productive businesses.

I remember the last proper crash very well - prices fell rapidly, ordinary people could buy and the world didn't come to an end. Some people lost their homes but that was because interest rates shot up - their mortgage did not magically become unaffordable because their house price was lower. The causation went the other way.

This time round, it is highly unlikely that interest rates would shoot up so recent buyers should not be affected, as if they could afford to buy at recent prices, they should have had to prove they can also continue to service their mortgages at current or even raised levels.

All that will happen is that the numerous 'investors', many foreign, will pull out of the market and invest instead in gold or shares or oil or whatever. The market is currently flooded with speculators. Remove them all from the market and you have a much healthier market. Better for everyone. Except the speculators, obviously. But I seriously don't think you should run a country to benefit speculators, money launderers and international crooks.

I simply don't understand how anyone who has kids and lives anywhere down south can possibly want prices to stay as they are. It is such an astonishingly selfish I'm-alright-Jack kind of attitude to have.

And it's just not feasible prices can stay at 15 X, 16 X earnings in some parts of London. It really isn't.

As I have said before, and someone much wiser made the original observation, owning a house is just a housing voucher that can be used in part exchange for another house. If prices rise and you are staying in the same area then the relative value of your house stays the same.

House price crashes are great for first time buyers, and don't really effect people who don't want to move but are a bugger if you need to move. The relative value of your house stays the same but you may end up in negative equity.

Pipbin - eh? How do you figure that out? That makes no sense at all. If you already own a home and want to trade up, then the gap between the one you own and the one you want to buy will get smaller, not bigger, when prices fall. Making it easier, not harder, to move.

So eg you own a house worth 200K. You want to buy a house costing 300K. You need an extra 100K. Say that prices rise 50%. Your old house has gone up to 300K - whoop! BUT the one you want to buy is now 450K. Boo. Not so good. You now need an extra 150K - 50K more.

But if prices fall 50%, your house is now worth only 100K - but the one you want to buy is only 150K - so you've saved 50K. Quite a saving.

Clearly, it is far better for those who already own and want to trade up if prices fall by 50% than if they rise by 50% or even stay the same.

Negative equity?

As someone who rents and will probably have to do so for the rest of their lives , what I would like to know is why the prices went sky high in the first place . In 2000 I could have bought ( had I been in a position to do so ) a normal 3 bed semi barrat box house for about £75 k , in 2003 the exact same house with no modifications was selling for £175 k at least . House prices rocketed in a very short space of time . I don't know whether this has happened so dramatically in the past or whether it was a one off . Obviously house prices have always risen . My friends parents bought their house back in the late sixties for £3,000 , by 2000 it had risen in worth to about £70,000 so over the course of 30 years it had risen in value as you would expect . They had it valued in 2002 as they considered downsizing and it was suddenly worth just over £200,000 , so in just two years its value had risen about £130,000 .
I remember the crash happening before and when using a mortgage calculator I always stick in 15% to see what it would cost if ( and when ) the interest rates go up , usually scares the shit out of me

On the question of whether we need to build, we have a lovely little conundrum.

The first answer is, unfortunately, yes. The ONS estimate of number of households in UK is 26.4 million. The estimate for number of dwellings - I chose that word as it should include all forms of habitation - is 23.2 million. So while getting all the empty and second homes freed up in Britain - the arrogance of allowng that practice to continue in these times is astounding - would help, it is not enough.

Meanwhile, and this is where the noose tightens, I've also seen reports saying that we're running out of space for farmland.

After 30- 40 years of gross mismanagement and social injustice we are out of easy options. The next few years are going to be crucial in many ways, and it is not going to be an easy ride. We need to look at numbers: both population (I am not blaming immigrants there, the native population still outnumbers them by a large margin), and also the number of households. None of us likes looking at population figures and it is a long-term solution which brings its own problems but we're going to have to.

The latter is a social problem because more and more people are choosing to live alone. That might be because (my own belief and skew) British men are not particularly pleasant to women and so we have to live separate from them. It is known that the UK is one of the more sexist countries in Europe. Another solution might be to encourage more single-sex communal living at all ages. And of course build the facilities to permit that. Another angle would be to tackle head on the idea that size of house= status so that fewer large houses are built. Sorry to hear your troubles, Pipbin (and 3-bed house itself isn't extortionate, depends on size), but generally it is noticeable that the bigger the house the less need the occupants have for the space.

ps and build up instead of sideways - flats - and more single-occupancy ones at that. Missed that off.

pps as you might notice I am a little confused about those figures, but they're probably a reasonable guide to a trend...

Frumpet The main determinant of house prices is the availability of money, so the boom was driven by deregulation of the financial industry, which allowed banks to adopt ever-looser lending criteria, ending up with Northern Rock's 125 percent of value, no deposit mortgages. (When I was a child nearly all mortgage lending was done by building societies).

London also draws in cash buyers, both domestic (bankers' bonuses) and foreign - for them, London property has become much cheaper because sterling plunged on the foreign exchange market after the financial crisis. London has also seen demand from rich Greeks/Arabs/Russians as a result of instability in those countries in recent years.

Finally, we just don't build enough houses - the population is rising and people are demanding more space than they ever have before (divorce and singledom mean more one-person households, the idea that children need a bedroom each when not long ago it was common for two or more to share, some children will have bedrooms in two houses because their parents aren't together, old ladies living in massive houses because there's no incentive for them to move etc) so demand is outpacing supply.

I find it amusing Gibbering that you assert 'British' men are not particularly pleasant and the UK is a sexist country and the rest of your post is equally funny and I cannot take it seriously. Promoting single sex communal living as a way to help solve the inequality in home ownership is equally preposterous.

Yes HOOT at the idea that Britain is one of Europe's most sexist countries.

It was a bit clumsy wasn't it.

Ok - how about- I have been attempting to put some hard figures on this question of whether we need to build more or not. I've got as far as finding that the number of households in Uk is around 26.4 million. I find it difficult to square that with the number of dwellings which is estimated at 23.2 million.

meanwhile I have also heard reports tha we are running out of farmland so we can't keep building sideways.

If there is such a large mis-match in numbers we are going to have to look at population numbers, housing density and household numbers. Nothing else makes any sense.

I will start these things...in a stupid way I mean

But Britain is one of Europe's most sexist countries. You just don't get the level of casual street harassment on the continent. Wish we could move there permanently, but unfortunately not an option. thread derail ends there, sorry

Sorry the only place i've ever been subjected to sexual harassment was in Paris. It was proper scary, lots of men openly leering at females in doorways and making sexual comments. I was 18 at the time and with a female friend and we were followed by some of these creepy guys. We managed to shake them off when some American tourists came to our aid

There were several occasions over the last 12 or so years when this could have corrected but loose lending and silly govt schemes kept prices inflated. It needs to stop. Agents always start ringing when sales are slowing and since xmas I am getting several calls a day with reductions. Prices need to relate to salaries and we need a comprehensive building programme.

have never got banned form anything , I am an accoutant for Peter's sake, and I fit the the steryotpye unless I have had a few lagers. I am not a mum so maybe I should not be here?

I was banned from though form another internet site.

On this site

(1) Landlords are going to loose all their money and end up searching through rubbish bins to eat as property is such a bad investment , the only people now buying are landlords and the chinese as property is such a good investment and this forces out first time buyers.
(2) Nobody is able to buy , except many of the people on the site who have stuffed their matresses with £20 notes and could buy except they do not want to.
(3) In the area they live prices have fallen for the last 10 years and rents have never risen the last time they negotiated with their landlord they were offered Porshe to extend for another year, well I lied about the last bit but you get my point.
(4) Women do not understand why they are so much better when their husbands many of whom could of bought in the past did not do so
(5) If you make any commenr that suggested house prices may rise you are an estate agent or a banker. Hoever of you say a magic pixie told you they will fall you are speaking wisdom
(6) They have never ever made a mistake calling the property market the govermeant intervened to try and engineer a soft landing could not of been forseen by anyone/

As I said I was banned after two postings I can only imagine this is because I bought in 2009 at a time where the was a minincrash and you could buy a three bedroom ex local flat in good parts of Battersea for 250k just under the then stamp duty rate. The last time a simialr one sold near me it went for £393.

I was thinking of moving to Balham and posted on a thread about Balham / Clapham I did not got to Uni and took AAT exams and then ACA from school in 2004.

I think my banning notice was due to the fact on the threas I posted you could see some previous postings and the prices discussed for this area wereso much lower than what they were currently beeing sold for.

Eh?

Pipbin - given how much prices have risen just over the last year, if they lose those gains again, no-one will be in negative equity, will they? Transaction volumes are actually still very low - the numbers of people who've bought recently and will be affected by negative equity is very low. And if you buy a very over-priced house at the top of the market, you are a bit of an idiot if you buy somewhere you don't wish to stay in for more than a year or two, or that you can't meet the mortgage for if interest rates rise even a little bit.

We can't run the country to convenience a very tiny minority of idiots any more than we can run to enrich foreign spivs and crooks.