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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To wonder wtf is happening with the London property market?!

216 replies

MeAndMine21 · 20/11/2015 03:11

Unbelievable. It's never been this bad.

Will it just keep going up?

OP posts:
sparechange · 20/11/2015 10:44

bookish
£350k for a small flat sounds insane out of context, but when you have been renting something similar for half your salary, the opportunity to own it for the same is frankly a bargain...
You can get buy a £350k with 2 salaries of £45k (plus a 10% deposit)
£45k salaries are not too difficult to come by in London. My PA earns more than that and is in her mid/late 20s. People in professional jobs will be earning a lot more than that by the same age.

The grotty area/nice area is a red herring. The nicest areas of London were truly grotty a generation ago. They became nice because people who couldn't afford to live anywhere else took a punt on them, and they slowly gentrified.

There is always going to be an element of being able to rent something in a nicer area than you buy but there is also a big element of people wanting to buy in the nice areas at the pre-gentrification prices - the example upthread of the flat in Tooting in a case in point... You can't just comparing prices now with prices then.
You are comparing a flat in an area where in 2004, people would say 'where?' or 'why?' when you said you lived in Tooting, vs somewhere now that has a restaurant owned by Soho House, craft ale bars and hipster coffee shops. It is apples and pears.

maybebabybee · 20/11/2015 10:51

It does also depend on your definition of a 'grotty' area tbh. I grew up in a part of London (East) that many think of as quite grotty and I think my definition is quite different from some others. I can't say where as will out myself completely but the area DP and I are looking at has been blasted as being incredibly rough on MN and it really, really isn't - it's 'naice', IMO!

Also helps if you aren't fussed about the school. I went to a shitty inner city comp and did very well, so I can't get too worked up about it with my own DC.

goggleboxismygod · 20/11/2015 11:02

I'm in London. We bought a well decorated and renovated 3 bed house 18 months ago for £300k. It's in zone 4, SE London in a lovely area that is just between 25-40 mins by train from Charing Cross, Waterloo East, Cannon Street and London Bridge. The problem is that people think they have to live on a tube line or in zone 2. If that's your view then I have little sympathy. There are areas like mine that are very affordable, but the lack of a stuffy, overcrowded tube or sub-30 min commute seems to prevent most people looking at it.

On the other hand, it's also worth mentioning that we saved like mad for our deposit over the 3 years prior to buying and even then we only had 5% to put down because we also had to pay for stamp duty, fees and furniture so we had to go for a help to buy scheme. We now have to suck up remortgage costs when our 2 year fixed term ends so that we can lower our interest rate. It's annoying because I work with a lot of pampered rich kids whose parents gave them money to help them get to the 10% deposit and it does create a bit of a chip on my shoulder sometimes...

newlabelwriter · 20/11/2015 11:08

It's ridiculous. Our old one bedroom flat in Stoke Newington has sold for nearly £400k. We moved to SE London to buy a house and that has now similarly nuts here as well. We are bloody Catford borders FGS and a 3 bedroom Victorian around here is £650k. It's nuts.

sparechange · 20/11/2015 11:11

newlabel
But it is only 'nuts' because most people's perception of Catford is the slightly grotty place it used to be 3-5 years ago.
Now, £650k for a solid victorian terrace in a place with great transport and nice parks and some decent pubs seems like a good deal, compared to what you'd pay in say, Balham.

maybebabybee · 20/11/2015 11:13

goggle I think you might be living in an area very close to where DP and I are looking actually!

I do agree with you. It's also all relative to how much space you think you need versus how much you actually need. I know many people who manage (and are happy to manage) with 2 DC in a 2 bedroom flat. But often people go Shock when you tell them that and think you need a 4 bed house with garden.

Agree also re: zones. Nowt wrong with zone 3/4!

Tomatoesareyum · 20/11/2015 11:59

Prices are insane. We are on the far reaches of the tube and the nice but ordinary 4 bed, 1 bathroom semi on a not particularly nice road with lousy state schools, we bought 11 years ago for £330k has just been valued at £875k. I'm delighted, or I would be except that unless I've near to £2M, which incidentally I don't, there is nothing on the market to even look at.

CallMeExhausted · 20/11/2015 12:11

In the financial crisis of 2008, DH worked for a home builder (not in the trades, he was the director of security). We live in Canada, and as I understand it, this all hit North America hardest, although very little of the Western world was left unscathed. The first thing they did was try to cut "overhead" And all "non-essential" departments were eliminated, including security.

The company lost money in amounts I will never see cumulatively in 100 lifetimes, and the executive vice president committed suicide.

However... prior to all this happening , real estate prices were at their highest on record and had been rising fast. See where I am going with this? They tanked almost overnight.

We struggled, but managed. DH found another position at about half the pay, but because we still rented a property that had been owned by the company he had worked for, our discounted rent continued to be honoured - and in our province, as long as you are still a tenant, even if the lease has ended (virtually all LLs have new tenants sign for the first year, then go "month to month" from then on, but tenancy is secure except under very specific situations) the maximum annual rent increases are tightly restricted.

Anything above the legislated limit must be specifically applied for to the province, and more importantly, justified. It is an expectation that LLs must adequately maintain properties - they may be penalized for not doing so - therefore routine maintenance, including larger expenses like replacing a furnace/boiler, appliance or roof, is not justification for an "out of scope" increase. In addition, a landlord may not charge any more than one month's rent as a deposit, which will be used as the last month's rent when the tenant ends the tenancy with 60 days' notice, must pay interest to the tenant on the deposit, cannot charge "application" fees, and may not refuse pets unless there are specific issues like safety (aggressiveness) or damage caused by the animal.

Now we have moved... we live in what was, for nearly a century, the centre of the automotive manufacturing "world" not fact, but you wouldn't know that by speaking to anyone who has worked in the industry . We are in a border city, and our "other half" across the river, being American, saw even worse effect from plant and supplier closures than we did.

When finances tanked, 2 out of the 3 major manufacturers either closed up shop or cut production massively. Unemployment in the automotive sector was in excess of 35%, people faced foreclosure at record rates, property values plummeted, rental stock disappeared when families who lost their houses had to find a place to live, and those who kept their homes couldn't sell them - they could barely find someone to hand over the titles to them, as, in many cases, the outstanding value of the mortgage exceeded the current value of the house.

We moved here after that all happened, but when unemployment was still in excess of 10%, the highest in the country. However, because of the housing price drop, we managed to find a beautiful big house to rent at a price that, in most other cities in the province, would be so far out of reach as to be a pipe dream. The house is 280 sq m and we pay the Canadian equivalent of £665 monthly - our LL wanted to leave the city, but couldn't sell when the value of her house dropped. We aren't overly concerned about our tenancy - she owns one other house that she rents. The tenant there has been there for 19 years, we've been here for 5 now.

However... housing prices in the largest city in Canada continue to rise at insane rates. They bobbled briefly with the financial crisis, but recovered and continue to climb. The prediction is that it will not last, and will start to level or drop, but it hasn't been seen. Other major cities all over the continent show the same pattern - New York, Los Angeles, Vancouver, Montreal...

I say all of this, because logic states that something, I can't pretend to guess what it will be, is eventually going to pop that bubble. It may be financially linked, or related to security, but it will happen.

This is simply not sustainable.

AnonymousBird · 20/11/2015 12:27

Don't assume 3 or 4 x salaries for mortgage, to the poster who said 2 x £45k salaries enables you to buy £350k. DH has annual pay upwards of £200k and we were offered a mortgage of £190k!!!! And we had to fight to get that much, AND that is with our existing mortgage provider, so they know our track record, been customers for nearly 20 years etc etc....

maybebabybee · 20/11/2015 12:36

anonymous that is terrifying Confused. DH and I have a combined income of £110k with no debt, good credit score etc and have an agreement in principle for up to 450k - do you think we won't get it?!

lorelei9 · 20/11/2015 12:41

to the pp who said about capital - as long as I've got to live in my flat, the fact that it's earned more than I have in the last 2 years is actually no use to me. It might be useful for someone downsizing or doing equity release but for many homeowners there is no benefit to astronomical prices.

in fact I really struggle to work out who benefits other than private investors looking to treat London property as being safer than a gold deposit where they can leave great lumps of cash.

AnonymousBird · 20/11/2015 12:42

maybe - if you have agreement in principle, I am sure you are fine. We recently went to reapply as we are moving house and (wrongly) assumed they would roll over our current facility of approx £300k no problems, they gave us that nearly 10 years ago when DH earnt much less. We got the shock of our lives when they said, this is technically a new mortgage, so new rules, we will give you £100k mortgage. We pushed back and appealed that decision, eventually settled on £190k which gives us what we need but we were aghast, since they have over 15 years of DH's employment details from the same employer all that time .....

lorelei9 · 20/11/2015 12:43

goggle "The problem is that people think they have to live on a tube line or in zone 2. If that's your view then I have little sympathy. "

no, I am 4/5 and I couldn't afford my flat now, I can only afford it due to having bought more than 10 years ago when salary multiples applied.

I couldn't afford Zone 2 then either!

TurnOffTheTv · 20/11/2015 12:46

We moved up north from the London/Surrey borders last years as we just wouldn't be able to get a mortgage to buy a house even though we have 100k+ salary.

We bought a 6 bed house for 215k which would only get you a tiny two bed flat in our old town, it's beyond ridiculous.

sparechange · 20/11/2015 14:24

Anonymous
Do you have lots of debt?
I've never heard of anyone being offered less than their annual income as a mortgage. There must be a back story to it? DH and I have just remortgaged, and they were willing to lend us more than they were 2 years ago, and we are on more or less the same salaries...

Incandescentage · 20/11/2015 14:32

This reply has been deleted

Message withdrawn at poster's request.

Floggingmolly · 20/11/2015 14:35

How far are you both from retirement, Anonymous? Could the time left to repay have something to do with it?

FluffyPersian · 20/11/2015 15:15

It's crazy - We've been house hunting in the South East and as soon as a new house comes on the market, we phone up and they've already got loads of bookings. My friend was looking in Reading, phoned up the first day a house went on, only to be told they weren't accepting any more bookings as they had 27 and knew they'd sell the house with that much interest!

We're looking close by and a 3 bedroom house is between £350,000 and £400,000 with a 4 bedroom going anywhere from £450,000 and £550,000... I'm currently renting with my partner, so we've had to basically save a 10% deposit plus stamp duty and solicitors fees and will hopefully be able to get a 3x mortgage to get on the property ladder (fingers crossed, will see on Monday!).

One house went on for £325K... it got sold for £40K OVER the asking price as so many people wanted it :(

talkinpeace · 20/11/2015 16:41

The London property market is nothing to do with housing.

Its all about investment and money laundering - right foreigners wanting somewhere secure and tax free to stash their cash.

THE UK is unique in the OECD in not having property taxes so its really cheap to but a new property in Chelsea, register it to an offshore company and leave it empty to appreciate in value and sell when life settles down in Russia / China / Argentina / Greece / Syria / South Africa / Nigeria

London is the Money Laundering capital of the world
and the UK is unique in allowing homes to be owned by anonymous LLPs

Look up on this map to see which houses are owned by offshore companies near you ....
www.private-eye.co.uk/registry

AnUtterIdiot · 20/11/2015 16:53

This reply has been deleted

Message withdrawn at poster's request.

Savagebeauty · 20/11/2015 18:01

Minnie Yorkshire.

maybebabybee · 20/11/2015 18:10

anutter DP and I can't afford those commuter towns either! for what we can get just outside London with 350k we may as well stay in London to be honest.

If we had the option of moving to another city or part of the country entirely I would do it but DP's job is only in London.

greenrose · 20/11/2015 18:18

I live in a council flat in London (zone 1) and similar flats are going for £450k now. It only has 2 bedrooms and there's not even a garden. No chance of me ever buying even though my salary is good and even with the RTB discount. This is at the bottom end of the property market around here as it's not particularly a nice estate. There are loads of new flats being built in our area but even the smallest flats are hugely expensive (more than the cost of my 2 bed which is a fairly decent size).

talkinpeace · 20/11/2015 18:20

50% of Londoners earn under £26,000 a year

UK property prices are driven by speculation
and the fact that owners are not penalised HEAVILY for under occupying them is disgraceful.

There are 400,000 empty homes in the UK
There are 1,000,000 second homes in the UK
There are 400,000 plots with full planning permission unbuilt in the UK

There is no shortage of property
just a total mismatch in the usage of property

a poor person is penalised for having a spare room
a rich person is not made to pay for having 26 spare rooms

Until the Council tax bands go up to Z
And the penalty for not having anybody with a UK NI number living in the property results in a tripling of the rates

London's property laundering will continue

DeoGratias · 20/11/2015 18:31

It is all about supply and demand. When London's population was reducing prices dropped. Now it is increasing and people from all over the planet want to live there prices keep going up particularly with interest rates at historic lows compared to the 12% some of us paid over the years.

The state interfered too much in imposing the 2014 new mortgage criteria which are too strict rather than letting individual banks assess individuals and take their own risks which has not helped.

The suggestion above of a loan of only 1x salary is not quite right for most people. My son was offered 4x. My daughter and husband about 4x.

Where I live (zone 5) and indeed much of London except the upper very expensive end it is not empty properties with foreign buyers - that tends just to be relevant to a few high end blocks in the Centre. The difficulty is more caused by not enough properties. Hopefully London Underground planning to build 10,000 homes on their land and similar schemes will help a bit.