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

[MeAndMine21]

Unbelievable. It's never been this bad.

Will it just keep going up?

Schubert is right. My son was looking at £200k properties and has given up until next year. The agents are so innundated with people looking at that level they don't even bother getting back to you. Appointments to view have people arriving every 15 minutes. He only had his offer accepted because we later learned (and immediately pulled out) HS2 rail was going to be in the field behind his property. So I expect that place will be hard to sell but not most others. In London it is fairly hard as a builder to obtain land cheaply enough to buy £200k properties on it. London Underground does plan to build 10,000 homes on its land, about 140 very close to me but that wilkl be a drop in the ocean and I would imagine they will sell at nearer £500k. There is a new development within a council estate near my house. I went up to look. The properties are very nicely done although it remains in the middle of the council estate. They range from about £480k to £600k. This is outer London.

Toad is correct. In 1901 my grandfather lived in the NE in a boarding house with 26 other young men according to the 1901 census. Presumably they had bunks in big rooms upstairs. There have been commentators suggesting the socialist experiment 1914+ has failed and we are now reverting to the previously much more common situation which I suppose you could argue is the natural state for humans - survival of the fittest with a bigger gap between those who succeed and those who don't. That may not matter of course as we all know having a lot of money doesn't make you happy. I am pretty well off but the nasty things I've endured have been much the same as any human except that I've never been short of food. So things like deaths, divorce. If that is so then people being jealous of others is the issue not that Jenny has money than Jane or that June has 500 sq foot and Pamela 5000 sq ft or even that Molly has a 32DD chest and Jill is flat as a pancake. The differences may well not matter.

What is hard is for children to have less than their parents as you grow up with the expectations you will have much the same as that is your norm. So not surprisingly middle class parents try to help ensure their children have similar.

There are some solutions that will and are helping - the cut in stamp duty at the bottom end, help to buy and right to buy schemes, the northern powerhouse attempts, BBC moving to Salford and I suppose keeping interest rates low. There is also a bill to change planning and extend a scheme allowing more building and conversions on unoccupied land.

I would like to see a right for citizens to buy unused state land to build homes on it.

Its not a free market.

Its a rigged market. Rigged low interest rates, rigged bailed out banks, rigged help to buy schemes etc.

The gov and boe did nothing when it went up, then when it starting d to look like it was crashing they stepped in to throw everything at it to keep them high. We noe have aa zombie economy still running in life support and interest rates close to zero.

Help to buy helping? Ha its just pushed up prices even more, that was just a bail out for the building companies. And has also made the tax payers back sub prime loans.

Yes, I don't agree with interest rate interfernce although the Bank of England sets those nowadays not the Government so it's more free than it was.
I also did not like the market distortion of help to buy only being available for new builds (the state wanted them as they add to construction work and help the economy) but the schemes have helped some people to buy.

I also think the 2014 mortgage rules tightening have not helped. Let your local bank manager decide if someone is a good bet rather than a complex set of rules which are hard to change.

I don't see London prices dropping nor inflation going up much either. They might well stagnate for a few years. In the 70s property crash you then had 60% inflation over 3 years which had a huge impact on loans and wages rose too. That was unstable and probably worse than things are today but we are certainly in interesting times with wage stagnation at the bottom end which the higher minimum wage will not really affect.

My advice to young people remains as always buy as young as you can even in a dreadful area and always buy before babies come along.

Its the classic thing to say when a bubble is about to pop that they won't drop and will just stay put at bubble levels.

It really wouldn't take much for sentiment to change. Prime London has been falling since last year, this will slowly ripple out.

Buying w property is taking on a long term debt. People usually only think about the interest rates for the next few years, not the 30 years + of the mortgage.

Think thisbthread should be bumped in a year.

Yes, it will be interesting to see. The credit crunch led to price drops out of London and only now have prices in those areas reached pre crunch levels. That did not quite happen in London. My daughter's flat was owned by a couple before her and in 5 years it did not rise more than about £5k in value when they owned it and that would have been over the credit crunch period. Then she bought and I relaly thought in 2012 prices might well drop but she'd own for 40 years so doesn't really matter, might as well get on with it and in fact it went up quite a bit, probably £100k.

We have never had a crash or bubble bursting where if you hang on in there London prices end up less than they were over the long haul, ever. Obviously sometimes you need to sell in bad periods - we sold two buy to let flats at a 50% loss in the 90s crash to sell our house then and put money from all 3 into this house. So that was bad timing in a sense although good timing to put a lot of money into one home but over the 60 years I will own a property these small ups and downs don't matter much.

Now as in the early 1900s the hardest part is and it was 30 years ago when I bought too, raising a deposit. It has always been the sticking point in areas with jobs where people want to live and work. 30 years ago they could only entice people to work in my children's father's school zone 5 outer London by offering school owned flats you could rent at very cheap prices because teachers were then priced out of this part of the market. Things seem not to have changed.

It certainly isn't true that it has always been possible for people to buy a house in London on a normal income. My OH and I bought a zone 3 flat near a tube station on two new graduate salaries in 1987 (small deposit and mortgage of 2.5x joint salaries which was the most you could get at the time), and my mother bought a 3 bed house in Ealing in the 1970s, as a single parent working as a teacher.

The difference between then and now is the sale of council housing, BTL, and too many empty properties owned by overseas owners. Plus economic policies that are excessively focussed on London and the SE. It's largely due to a failure of government housing and regional policy (both parties at fault of course although things have got worse in the last 5 years), and the blatant buying of votes with perverse incentives.

Most places in London were affordable on a professional income in the past.

These days you have two doctors that can only afford a shitty flat, in an area that a few decades ago was dirt cheap and only poo lr immigrants lived in.

Dyslexic,
Who lived in the area a couple of decades ago is a total non-argument
London has changed beyond all recognition in that time, shaped by people not being able to afford to live in 'Prime' areas.
Fulham, now the reserve of bankers who can pay upwards of £2m for a Victoria terrace, was a grimy working class neighbourhood until the 70s/80s, when people who were priced out of Chelsea moved there.
peopke were quickly priced out of there and Clapham was on the up.
Then Clapham got expensive and Balham had its day.
The exact same thing happened in North London to Islington, Kilburn, Maida Vale, queens Park.

Talking about how a professional salary in the 60s and 70s could buy a house in Notting Hill or Clapham or Islington is overlooking the fundamental point that they were quite shitting areas back then, and you could buy houses because no one else wanted to.
What you definitely couldn't do was buy something in an area that is the equivalent level of desirability that Notting Hill et al are today.
My grandparents rented in South Ken but had to move out to buy in the late 50s, and they had 2 professional incomes which was rare in those days.

A couple of generations ago, the naice parts of London (Belgravia, Chelsea, Knightsbridge, Hampstead) were very much the preserve of the very rich. Anyone else had to move out of a gritty area and hope enough others had the same idea and it would smarten up. Much like today's buyers in Peckham, Catford, Layton, Stratford, Colliers Wood, cricklewood etc

What most people seem to want is a house or flat in an area where you feel safe (and has decent schools if you have DCs), with decent transport to give you a reasonable commute, a couple of decent pubs and restaurants and places to do their weekly shopping, in that order.

sparechange that's not really true tbh. There is a quantitative difference now: people on normal salaries cannot afford to buy anywhere, and even for those on good salaries it's a struggle.

I grew up in Ealing - it wasn't and never has been a particularly deprived borough. "Ordinary" professionals (eg school teachers like my mother and sister) could afford to buy here pretty easily in the 1970s and, on a double income, even as late as the early 1990s.

In the mid 1990s on fairly average professional incomes (I worked in the city office of a large manufacturing company, DH was a hospital manager) it would have been possible for us to buy in reasonably pleasant, moderately affluent zone 2-3 areas like Crouch End or Stoke Newington. Around that time a close friend bought a maisonette in Highgate, 5 mins walk from the Heath, on an NHS physiotherapist's salary! (He and his wife and child still live there, and it's worth upwards of £500k; nowadays even with equity of half a million they couldn't afford to upgrade to a small house in the same area).

I don't know where people would have to go these days to find equivalent affordability - outside London or the grottier areas of zone 5-6 I would guess (with the additional transport costs that implies - I lived within a 20-30 min cycle ride of the City the entire time I studied and worked in London).

I live in zone 5 now deep in the suburbs.

We bought our 3-bed, nice but nothing special, semi in 2009 (so post-crash and pre-recovery) for £290k. Quite cheap really - we were lucky.

The house opposite us (identical basic house but extended in a slightly different way) sold last summer for £600k. The couple who bought it both work in the City and I imagine would have bought somewhere like Clapham or Wandsworth a few years ago. Our next door neighbours - retired baby boomers - have lived in our street since the early 70s. He sold insurance and she worked in a shop. Our neighbour on the other side was a painter and decorator. There is a definite shift in who can afford to live where.

We live in Cornwall, and my recently widowed mil has just had to virtually give her house away, and I know loads of other people who have had houses on the market for over two years. Property down here just doesn't seem to be shifting at all.

About 15 years ago there seemed to be quite a few families moving out of London while the DCs were growing up, but that has changed completely. I think people are terrified now of moving out of London, because if they leave they will never afford to go back again.

misti
The people priced out of Ealing are now buying in Southall, Greenford, Hanwell, Osterly etc
Still very commutable, still near green spaces, but currently lacking the chi chi coffee shops and delis of Ealing Broadway?
You can buy a 2-bed flat for around £200-250k which is very affordable for a couple of average salaries.
A friend of mine has recently bought his first place in Southall, and when I went to see it, all the signs were there - loft conversions being done, a few independent espresso vendors near the station, houses being renovated on his street.

And Stoke Newington in the early 90s was not somewhere I would have been clambering to live! It was really quite dodgy, although not as bad as hackney!

I am so glad that I don't want to live in the South East or London, it sounds horrific. My two adult step sons do own houses there, one in Hertfordshire and one in Sussex. The first had a lot of help from his mil and the second worked up from right to buy council flat in Crawley to a very beautiful house in a nearby town.

There are plenty of places that are still affordable, people just turn their noses up at them.

DS bought in Enfield, his friends and others are buying in Harlesden, Kingsbury, Colindale, Neasden etc.

A very good point made earlier is that lots of people are wanting to buy in what are now desirable areas, and are complaining that the prices are not the same as when they weren't desirable. I've said before on threads that when we moved to Kilburn it was cheap because people who want to live in "desirable" areas didn't want to live here.

Also the demographics of London have changed massively over the last 20 years. There are so many more well paid professionals living here. Of course there are still lots of people in lower paid work but there are a huge number of people who earn good salaries here. That pushes prices, especially in desireable areas up.

On MN there seems to be a thing where people want to live right on top of the tube, in an area that has all the top class amenities and big beautiful houses, yet all at the prices people paid way back when these areas weren't quite as desirable.

Back to supply and demand then isn't it Toddler? There are enough people who are willing to pay high prices too keep demand for houses and flats at those prices high...

Oh and there is no such thing as a free market, people only play that card when changes are proposed to the market that are not in their interests.

Yes, as long as we have Gideon as Chancellor and a Tory London Mayor.

Misi, 30 years ago we couldn';t afford to buy in Ealing (teacher salary) and have to buy out in zone 5 where I still live. In fact my children's father 's school had to offern school flats at low rents to get teachers to work here at all (zone 5 30 years ago) because it was so expensive. I am not saying that there have not been big increases since but it was still hard in those days. I did that commute crom zone 5 to London every day with babies and it's not fun but it was the only way we could afford to buy then. Whereas now my daughter bought in zone 1 so that's an amusing reversal although she's married a bit older than I did _ ( we are both lawyers) and she just had baby (I just came from the hospital) so it was born in zone 1 in 2015. I wonder what it will be writing about London house prices when it's my age in 50 years' time.

I would like to see a right for citizens to buy unused state land to build homes on it.
That is one of the daftest posts on the whole thread.

Selling off under used local government land in the 90's is why there are not enough school places in London FFS

and selling off too much land for flats is why HS2 will cost a fortune to run through london

I see, we still have those who think the problem is shortage of supply, London is not the same as Ireland,Spain or even the US.

Absolute rubbish.

Sterling was undervalued by about 30% for quite a few years the market fell by about 20% after the last crash.

If you were cash rich in Euros during that period you bought at a 50% discount. If you factor in the % property increases, sterling is close to its true value(Buying at say 500k Euros =550 Sterling in 08 your property is now worth about 800K sterling and 1.1 Million Euro).

In other words you have made 100% return on your money versus less then 1% in a bank. There is no capital gains tax on owning one property in the UK.

There is a point in all markets that need correcting the UK is close to if not all ready at that point.

Its ironic, I got badly burnt in property in the not so distance past, you would have thought I'd have learned my lesson. I found myself buying into the hype around the UK in particular London market.You know, quoting the usual, never ending population,not enough supply......

That was in 2013, by 2014 London has year on year increases of 20%, queues outside flats, sealed bids, and of course the old fav's If you don't buy now you never will.

Hang on, I recall the above all being said in every country with a bubble the last time. You say, London and the UK is some how unique!

By the way. New York, Hong Kong over valued. Brazil is down by 20% in one year,after having had increases around 100% in less the a few years.

Well there obviously is a shortage of supply if people who want to buy are unable to do so because there are so many people competing for houses that it drives the prices up.

There may be short term dips in prices, but in the long run the trajectory is only going one way.

Poor economic comparisons with other countries with different economic situations to London will not change that. Oh and as a comparison you could note NYC prices are rising, Hong Kong and Singapore have had increases too.

Em, I clearly said New York and Hong Kong are over valued, I'll be clearer they also have had serious percentage rises over the last few years.

All the markets I have quoted have also suffered from the same issues as London, a untold amount of buyers parking money in property,in turn driving the rest of the market up.

Well, you can believe what you want, I've lived in and bought in three of the cites I've quoted, I'm reasonably familiar with the fundamentals too.

Correct if I'm wrong ,the average first time buyer in London needs 10 times income and a deposit of about 100k what do you think they can afford if there is new supply at 450k.

Any market expecting 10 times average income for property is a bubble.

Eh? 10x income and 100k deposit?! DP are buying a 350k property with 10% deposit.

But thats it isn't it 10 times average income... the average income of a Londoner is £39,000. So a couple would have £78,000, and ten times that is 780,000. The average London house price is £500,000 and there are lots available below that price bracket.

You can use hyperbole all you like to make yourself feel better, but it doesn't make it ture.

London, NYC etc will not see a major correction in prices as there is simply not enough supply. The entrants waiting to come into the market at slightly lower prices actually keep the prices at a certain level.

There will be no massive price drop, even a 20% fall in London would mean that something that is currently £300,000 will be £240,000, the more desirable places where flats are £500,000 would then be £400,000 etc. Still expensive, still keeping many people out of the market.

But as previously said a massive price crash would be detrimental to waiting entrants as salary multiples will get lower, deposits higher etc and eventually the market would start to rise again anyway! Any crash would be short run, in the long run prices are either going to stagnate at best, or keep going up at a slower rate.

But thats it isn't it 10 times average income... the average income of a Londoner is £39,000.
But only the top 30% earn average mean or above.

The median London Income is £26,000 : half of all Londoners earn less than that .....

If DP and I were being offered a mortgage of 10x our incomes we'd be looking at properties over a million quid - not two bedroom flats for 350k in SE London