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

[MeAndMine21]

Unbelievable. It's never been this bad.

Will it just keep going up?

To the RTB landlord on this thread: just to disabuse you - as someone who has rented privately for 10 years before we were able to buy - this was never some benevolent choice you or people like you extended to me, whatever you choose to believe.

I rented 10 places in London in 8 years on initial 6 month tenancies with an extension to continue. I always asked for a longer lease. I was evicted 8 times due to owners selling up. Each of these occasions resulted in me spending in excess of £2k in estate agency fees and moving company costs. I really couldn't afford it at the time.

Please don't pretend that because you might personally be a 'nice' landlord that this is standard by any measure, or that you are doing something benevolent by your renting out a property - you are doing it for a financial return, one which screws a lot of the rest of us. I accept and understand your economic choice but this cannot be dressed up as creating housing for those who need it - it's to create a return on your investment, which is also a valid economic choice. I think many of us here would wish that the sector was better regulated so that those of us on the other end of your investment decision were not as badly affected by this choice, and that there were better tenancies and security for those who are renting. Just don't expect that we will be on the end of this and still see you as being benevolent because you aren't - landlords are making economic choices, and the only thing that will fix this is a government level decision to deliver a better deal for those renting privately. To your benefit, and renters' deficity, they chose your side. Don't rub out noses in it.

And on the other side despite having pretty good tenants I and my daughter are glad to see the back of our days of letting for very little profit with the massive hassle. My daughter had to pay £2k for a new boiler for the tenants. She paid the agents over £3k. The rent just about covered the interest only mortgage so she made a loss. Thankfully she's now moved into the place so tenants are a thing of the past (and she did by the way want tenants to stay longer but in London and with their being young people they tend not to want to sign up for longer because they fall in love or work moves them to Manchester or whatever).

However without the private rental m arket it is not some wonderful world where there are lots of very cheap houses to buy and lots of brilliant council housing. I remember when I first tried to rent in London. I think assured shortholds were not quite available so if you let your tenant coudl be there for life. So not surprisingly no one really let property out at all so people had to live with parents and I had one room and down the corridor was a shared loo and shower. That was typical.

It certainly isn't a free market, made clear by the fact that there are subsidies, regulations etc etc which impact the supply and demand of the market. Hardly "unrestricted competition free from government intervention".

The real lack of free market is 50% of zone 1 houses are social landlords - that is the real problem, not private landlords

CD, true, in my daughter's ex local authority block she paid £750k for their 2 bed. They are surrounded by lovely old ladies who have lived there for about 40 years in social housing (who love having a normal English couple near them to chat to and make very good neighbours). I am not suggesting we make them all homeless. If we look at a different demographic our first nanny's parents out here in zone 5 and and her husband's parents all had moved out from inner bits of London when suburbia was being built and the slums of inner London cleared out. The movement of people around bits of London in and out for various reasons is certanily not a new thing at all. in the past when we had 1m live in servants in England the only way most of those people could live in London is they had attic rooms in their employers' houses.

But CD a lot of the property that the social housing people are in was built in order to be social housing, you can't exactly say that its unfair for people in council built, Peabody or Grovesnor built blocks to keep out others, because without the need for social housing those blocks wouldn't have been built.

The free market argument is totally incorrect anyway... because free markets don't actually exist. People only use that argument when interventions into the market effect their vested interests.

carol
And 50% of all central London new builds are going to offshore buyers ....

My clear impression is that prices have peaked in London - agents actually chase me now, no 'open house' viewings, lost of properties reduced in price. If you believe the press, New York is now a bargain in comparison to London!

Also, apart from the other restrictions on 'buy to let', it seems that these will be regulated/'stress tested' from next year, in accordance with some EU directive. Interest rates must rise at some stage.

I was going to buy, but our purchase fell through due to an adverse survey, and now I think it better to wait. I don't predict a big crash, but price stagnation and more choice.

Interest rates must rise at some stage.
So everybody says, but there is no sign of inflation anywhere and massive debt that would crash if they did.

Depends which bit of London. Very outer at £200k - £300k people queue to buy and there are few properties.

There are new buy to let lending rules coming into force this year which will make it harder for many landlords to obtain buy to let loans so we might well see a huge surge in buy to let buyers in the next few months before the higher stamp duties come into effect and those new rules.

www.bbc.co.uk/news/magazine-34930602

Hardly "unrestricted competition free from government intervention".

somebody used those words with a straight face?

Thanks for the link which said "A study of government statistics for England by Empty Homes found that, overall, areas in the North tended to have a larger proportion of unused residential properties than those in the South. Seaside towns were also more likely to experience the problem."

Certainly around us (outer London) just about nothing is empty and we have more "beds in sheds" than any other London borough.

Some seriously good posts on this thread from talkinpeace and toddlerwrangling. I loved the Private eye map talkinpeace linked to - I was amazed to see that even in my area (zone 6) there's a fair bit of foreign investment from Guernsey, the Seychelles etc. Back in Bankers' Paradise, where I used to live, (Kensington) the map is a blur of dots. I lived in a block of 88 flats that were almost completely occupied by short term lets, or unoccupied. There was no sense of community, the residents' association was only marginally less corrupt than the freeholder, and everytime a pipe burst and flooded we were in trouble because nobody could ever find the owner/resident. I see that in the same street, a one-car garage was sold for £7.5m. That's a very London story - the multimillion pound garages. Surely to goodness that points to investment/money laundering, not a genuine need to pay that much for secure parking.

So everybody says, but there is no sign of inflation anywhere and massive debt that would crash if they did.

there's no sign of inflation anywhere on a thread where the topic is the insane property inflation.

redstrawberry
I mean real inflation

• food
• fuel
• raw materials
• clothes
• wages

all of which have been flat for ten years in most of the West

I mean real inflation

something is conspicuously absent from your list - the subject of the thread.

The CPI doesn't account for housing at all, and the RPI does it in a weird way. However, as we see on this thread, house inflation is a very real thing.

redstrawberry
house inflation is a very real thing.
Only to those who are moving house - which is a very small proportion of the population

I've been in this house for 18 years and will be for a few more yet.
Its value is entirely irrelevant at the moment.

On a day to day basis, for the bulk of the population, inflation has been flat for a very long time.

which is a very small proportion of the population

define small. and that doesn't apply to tenants under lease renewal.

On a day to day basis, for the bulk of the population, inflation has been flat for a very long time.

true for everything but housing.

Don't you see the irony of the claim that inflation is flat on a thread where the topic is the inflation in a households biggest outlay?

65% of homes are lived in by owner occupiers so it is the 35% who are affected by rent increases but probably not some of those outside of London and in social housing.

I remember the 3 years in the 1970s when inflation over the 3 years was 60%. However then we had a massive property crash (before or after I don't remember which), the country was on its knees with constant strikes and manufacturing industry just about gone and we also did though have inflation in terms of the cost of goods in the shops and to an extent wages. That's been the interesting issue recently - flat wages and food and most other bills and interest rates for so long.

When poor Lord Young said mortgage owners had never had it so good (and lost his job) we actually correct because for those in a house they will live in for 40 years nothing benefits them as much as low interest rates on the mortgage.

Horses Mouth
www.gov.uk/government/uploads/system/uploads/attachment_data/file/479076/October_2015_HPI.pdf

65% of homes are lived in by owner occupiers so it is the 35% who are affected by rent increases but probably not some of those outside of London and in social housing.

The number is significantly lower in London (I think under 50), so that skews it. And I am unconvinced that social housing lowers inflation. It's still there, just not being felt by the tenant.

Also, there is the assumption that this increase in price factors in for no owner occupiers.

Horses Mouth

page 5, regional figures. London: 10.6%.

AS per here
www.gov.uk/government/uploads/system/uploads/attachment_data/file/423249/Dwelling_Stock_Estimates_2014_England.pdf

there are 23.4 million dwellings in the UK of which as per page 12 of the previous link, 77,000 change hands in an average month

that is as I think even redstrawberry will have to agree, a pretty small proportion - just over 3.5% in fact

You can't do a back on the envelope computation like that. What we need is a regional CPI. The latest one (from 2010) has London significantly higher than the rest of the UK.