To think London house prices are unjustifiably high

[Alanis126]

I was recently visiting London, where I once lived. It was a big big struggle financially and I wasn't sorry to leave. House prices have been stratospheric for 20 plus years and while there have been some small declines in recent years, I saw a central and fairly nice but ordinary sized flat which cost £1m. There are of course many properties costing way more. There are a couple of things in particular that I don't get. Forgetting the £1m central flats, even a very ordinary property in a quiet zone 5/6 area without much in the way of social amenities was £400k plus. While some people have family money, I think it is fair to say most people start their working lives with no or negative net worth. For many the early/mid twenties will be the lowest point if their income and when they most would like to or benefit from having access to social amenities. When even rent in a grotty house share is £800 plus bills, I don't see how it becomes feasible to live while you are trying to build a career. I know there are other cities but what if you have a job in an industry only existing in London? If houses are £2m or £3m then does it matter anymore what the price is? Could they be worth £5m, £10m,£150m? And while I accept people may still choose a London lifestyle, if someone has London equity and doesn't enjoy their job, is it only fear of being priced out for good that stops them relocating and having a total change of lifestyle?

The thing is, houses in a lot of places in the south east are really expensive. I grew up in Brighton and very few of the people I went to school with now live there - they can't afford a family house.

Similarly, places like Sevenoaks, Harpenden, Oxford and Cambridge are really expensive.

I don't understand how ordinary people like nurses ,teachers ,shop workers etc etc can afford to live their tbh ,do people who would ordinarily in the rest of the UK have a reasonable standard of living say a staff nurse have to claim housing benefit ? I stumbled across a renting site for London today they were advertising very cheap rooms for £670/month here in my town in the Northwest you can rent a nice 3 bed for that or less

I agree it’s high but I don’t think it’s totally unjustifiable. London is a major city, lots to do, good schools, good universities etc so it makes sense that it is expensive.

Houses are being financed on interest only mortgages and it's a ponzi scheme.
The only concerns are:

1. Can you afford the monthly interest?
2. When it's time for you to bail out, will there be another sucker to buy it off you?

If so, go for it. London is a great place to live.

I'm Northern, and they look insane to me. As a teacher my standard of living would be utterly shit in London and I can't imagine why anyone would choose to teach - or nurse - or do any other kind of ordinary job there, frankly. I couldn't ever afford to buy a house. The London weighting goes nowhere near allowing you to have the same kind of life doing that job somewhere else. I just don't get it.

Trouble is alot of people have invested in property as there is a housing crisis in the UK and a massive shortage and are relying on the monthly income for their pension/pay off their mortgage, the only way the current property mess will resolve itself is if the Government raise interest rates, stop interfering with various help to buy schemes and put restrictions on who can and can't buy, prices will then come down, unfortunately hell would probably freeze over before any of them things happen as they make so much money off people selling homes at crazy prices

Another issue is that many who buy the super expensive properties in the most desirable London postcodes don’t live in them, they just exist as an investment and part of their property portfolio. If you walk around certain areas there are almost entire streets of properties nobody actually lives in.

I think they are too high now. We have low interest rates & in a lot of areas the market has stagnated & it started doing so in my area of SW London before Brexit.

The last 10 yrs has seen lots of property moves driven by gains in equity, Ive seen people make almost 500k- 1m in 3 yrs just by buying at the right time. The issue now is the lowest rung is too high, most parts have now gentrified (at least on paper). The 2 bed flat today that costs 500-600k is not going to be worth 900k in a couple of yrs. Lots of people are stuck on the ladder & can't move up either.

They are over priced and not worth the money...even ordinary half decent small houses will cost now about £500 k....and thats in zone 3 or 4..I bought a 4 bed victorian semi years ago...needed lots of work..it cost 23k...and was at times a struggle to pay for it...neighbours are now selling up and cashing in and getting around £800k...I like where I live and am happy here for next 10 years or so....my area has changed so much....now have nice cafes and shops and restaurants etc....had all that when I moved in and then a huge decline but its bounced back.

I have had 5 neighbours leave London & move to other cities because they just don't want to buy the houses available. They had good budgets 1-1.2m but didn't want to pay that for a terrace with no parking & tiny garden.

I read an interesting theory that in 15 yrs or so baby boomers will die & a flood of larger properties will hit the market all at the same time depressing prices.

Don't blame tbh @antlady you could afford. Something very nice up North for that budget

I completely agree, having lived in London all my life, I was lucky to buy a property when I was very young and they believed you’d work forever and threw money at you. I have no idea how the next generation are expected to afford to stay living in the city, maybe I’ll sell up and retire to the country (if there’s any money left).

We stay because myself & DH are Londoners so have family round the corner. Priceless with small dc so the bigger home will have to wait.

I can only assume that average salaries are a fuck of a lot higher. I have a semi-rural 4 bed for £190k but there isn't a lot going on here socially and culturally. Having said that we are in one of the most beautiful parts of the UK and have reasonably easy access to the coast. I find London prices astonishing but the variety of career options and entertainment must go some way to making up for it. We only visit once or twice a year for the weekend and have to make do with less fulfilling jobs.

What also doesn't help in London is ftb are now older (33) & may have dependents or planning them so they want a bigger property bypassing the 1-2 bed flats. Due to stamp duty you don't want to be moving loads. Not sure what will happen when help to buy ends.

Gorky the point about the premium youd pay for social and cultural activities I'd look at like this. There's no doubt London offers a wider range of them than anywhere else in the UK but it's not as if nowhere else has anything. Liverpool and Belfast have plenty going on, also have gorgeous accessible countryside and city centre house prices are probably less than 10!% of the London equivalent. I cannot see that the cultural life of London, while undoubtedly richer, is ten times better, and Londoners don't all earn ten times more. I do wonder how rhe city will function if and when it literally cannot recruit dor any job except stratospherically paid financial services professionals. Also, what happens if amd when the worst room in a shared house in the worst part of London is 100% or more than take home pay for these jobs? Or if train fares continue rising above inflation so commuting becomes unaffordable? Or if the transactional costs e.g. stamp duty are so high due to high property prices that people cannot afford to trade up within the capital? In some ways I think it is the £500k really not very nice flats in run down streets in places like Croydon, Hackney and Edgware that are the worst value of all. Where will it all end?

It’s supply and demand whilst people keep buying the prices will keep going up.

Meh - it’s expensive yes - but Dh and I see London as a temporary home as do a lot of people I suppose! I used to really struggle with how expensive everything seemed - but we are now about to buy our first apartment in zone 3 - it’s 435k - repayments on mortgage will be slightly lower than what we’ve been paying on London rent the last 6 years - so we will be able to afford it! 2 bed will be plenty big for a while even if kids come along ! We will probably move back to home city eventually!

We Are not super high earners either. I don’t think it’s unjustifiable though - it is what it is and there are people buying them at this price etc

If I was buying now I would only be tempted by a doer-upper with loads of potential. Otherwise I'd buy in another city & rent that out (fair few friends have done this) or look at houses in the outer zones. I would want the option to stay put for a while as it's hard to make much profit these days if moving on quickly.

Oh & one thing that will have a big impact is the rise of wfh &/or not having to be in the office 5 days a week.

My younger sibling is in his 20s & this seems the norm for many of them, he actually continued working for his company whilst moving to Italy for 6 months & one of DHs assistant has moved to Spain but the company has kept him on. I actually get worried that the area I want to move too in 5 yrs will get too expensive as more people have this flexibility!

It’s completely unjustifiable and I’m surprised anyone thinks it isn’t. I’m actually in the process of buying a small flat in London as I’m lucky enough to have a salary enabling me to do so, but I really hope brexit brings about a house price crash. Couldn’t care less if I end up in negative equity. I’d rather see people less well off than me able to afford homes. I don’t think housing should be for profit anyway

@Alanis126 - yup - lived there most of my life. All good on the work and ‘cultural amenity’ front till I had kids.

Life got smaller thereafter and I do things that I can do in pretty much any part of the country.

We moved out and although initially hard (and we still live in the southeast so still expensive), the only thing I worry about is work opportunities.

£400k for a 2 bed flat is ridiculous.

I was born in London and my mum who's 87 lives close by, my kids all have their friends and lives here. If you want to leave then fine but if you want to stay where you're roots are then you just make it work.
We have 2 properties in Manchester and 1 on the south coast - the rents on these pay for us to live in our lovely part of NW London.