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?

Houses are worth what someone is willing to pay.

@antlady not sure if your question is directed at me but if yes, my view is that people born in one part of the country don't have any more right to live there than anyone else. The Cornwall argument (as I shall call it) works both ways: if the Cornish 'deserve' to live in the area you're suggesting that those born in the deprived, run down and economically deprived areas of the UK need to stay there - if they all do well and life and can afford a house in Manchester / the Lakes / Edinburgh / Cornwall etc they'll price out the locals clutches pearls

Tosh.

Where you are born should have NOTHING to do with where a UK citizen should be allowed to take his/her money and make a life.

*do well in life

Of course I'm not suggesting that people deserve to stay in deprived areas, bit of a leap.

However you often see the issue re locals & housing highlighted in areas such as Cornwall but not so much when looking at Londoners.

I think there can be discussion around more social housing/restricted rents.

For future generations whether their parents owned property or not will probably affect their outcomes more than their actual job will.

And I dont think it's good to have a situation where only the wealthy can afford to stay or have children. The city needs police, paramedics, nurses etc.

To answer OP’s final question, we’ve often looked at the possibility of moving out with London equity (not millions!) but haven’t been convinced. The houses and areas that I’ve been drawn to outside of London have still been pretty expensive, so once you’ve factored in the risk of not being able to find another job outside London and the need for cars we’re better off staying put.

I do wonder how people with lower paid jobs will afford to live here longer term. At the start of your career it’s possibly more desirable for some to rent in a shared house for a while with all the social benefits and proximity to amenities than it is to rent a 3 bed house.

Are there any capital cities with relatively low house prices? I guess we’re paying for the constant opportunity of having work nearby, and the sense that the house could always be rentable if need be.

I wonder if (idly musing at 6am) the fact that many more families than in say the 1980s or even 90s, have two parents working outside the home means that the support network argument has become more rather than less important to people - because there's now more reliance on dgparents for childcare. It is difficult to buy the kind of flexible childcare that dgparents and other relations sometimes provide.

I don't think it's only the support network that stops people moving out of renting in London to buy elsewhere though. The wish to stay near friends in your 20s, shorter commuting, jobs that don't exist in such numbers outside London, are probably also important. I expected more of a trend to leave London as people might be expected to choose to move out to buy rather than continue to have to rent in London. But it seems that the desire to buy rather than rent is not as powerful as some of the other factors. (I realise that 'choosing' to move out to buy is not an option for many who can't afford to buy elsewhere either - I suppose i am thinking of, say, teachers and nurses who could afford to buy in some other parts of the country)

But what do people mean by saying it's unjustifiable? If people are willing to pay the price?

Quite. In an unregulated market, something is "worth" whatever someone is willing to pay for it.

I think it's crazy though, and wonder what will happend when there's no-one to fill low-paid jobs in London because you have to be on a massive salary to be able to afford to live within travelling distance of your job.

I do wonder how people with lower paid jobs will afford to live here longer term

and

And I don't think it's good to have a situation where only the wealthy can afford to stay or have children.

The interesting thing is I don't think we have that situation - although we do have the situation that fewer people can afford to buy in London, particularly first time buy. Still, lots of lower paid families do live in London - so long as there is social housing, and hb for private rentals, that may continue? What is difficult (impossible?) is to buy in London on average salaries without parental help. I'm not including shared ownership schemes in that - it is interesting to hear about these.

Ah - we cross-posted Lakie! My point was that as long as there is still social housing and hb for private rentals, lower paid workers will still be able to live close enough to fill those jobs.

(Economists might be able to analyse to what extent the rich in London are being subsidised by hb - as pp say, they need people to work in London shops, restaurants, hospitals etc. To the extent that this is made possible by hb and social housing, if not for that the lower paid would have to be paid higher wages to enable them to remain in commuting distance - which would feed through to higher shop/restaurant/services prices.

Where we live, all of the new build flats and small houses are being bought by Russians and Chinese. DD1’s Russian friend was bought a flat in the Barbican when she left school and went to university in London. There is a new development near us - we walked home through it the other week and the car park was full of Russian registered cars and most of the people cooking their dinner (kitchens are street facing with a big window!) seemed to be Chinese. But at least these places are lived in and are not empty second homes.

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?

Re; your above comment, I have to say most people I know that work in London don’t actually live there, or within the M25 for that matter. They commute in daily. The common pattern amongst my peers was to rent or buy a flat in London in our 20s, then move out to the South East (or other parts of the UK) in our 30s when people started settling down. I’m guessing this pattern is still happening to some extent?

I also find those that have moved out rarely want to return 😂 - so not much fear of not being able to return here. Once you get a taste for having large gardens (or even just a garden), parking outside your property and general green space etc you don’t really want to return to London. What you sacrifice in the perceived convenience of living in London you make up with quality of life of living outside it I tend to find.

"Croydon, Hackney and Edgware"

These are very different places. Personally, I think Hackney should be the most expensive of these 3. I live in Tower Hamlets which is next to Hackney and allegedly cheaper. My son goes to school in Hackney.

People bawked at the amount of rent that I pay for a 2 bedroom flat in this area but prices have risen dramatically since Olympics. The place next door to me is £300 a month more.

is it only fear of being priced out for good that stops them relocating and having a total change of lifestyle

There are other concerns. For example, I have some friends and family who live outside London just outside a major city within a home county but their healthcare is atrocious. Their nearest hospital with an A+E is 20 miles away. One cannot get a dentist so has to have any emergency dental treatment done at a practice who will see her at the time but none will officially register her as a an NHS patient.

Some of the other parents of SEND children outside London that I have spoken to struggle to even get an assessment for their children, especially now. There's a woman who lives in Yorkshire somewhere on facebook. Her daughter is in year 5 but her SEND issues mean that it is easier for them to look after her in a Year 2 class which happens to have TA allocation due to their being 2 children with Downs in that class. They think that is perfectly adequate for her to be in a class with children 3 years younger knowing that she is unlikely to progress academically and could be a danger to those younger kids. When you say to these parents to access this charity or organisation , you find they are specific to London and their local area has next to nothing similar OR it is county-wide so inaccessible geographically or too stretched to be of any real assistance.

Don't get me wrong, London is not great at all for my son, but from research, he is the best place by being in the capital unless we could access private services.

House prices are never unjustifiably high or low. The market sets the rate, so they are the price they are for a reason.

A flat in C London may well be a million plus, and it's a lot cheaper to buy a flat in Rotherham or Grimsby. But there are good reasons for that, so it's perfectly justifiable.

but what if you have a job in an industry only existing in London?
This whole country is stupidly over focused on one city. It’s ridiculous how much stuff only happens in a London that could perfectly well be done elsewhere. Hopefully the ridiculous house prices will combine with the pollution and overcrowding to force wealth and activity to spread.

A pp below mentioned public transport as an advantage of London. I think this usually gets left out of discussions but is indeed a major advantage (and perhaps in other big cities?).

eg in London there is free bus travel up to age 17, discounted bus travel for job seekers I think - and in many areas of London it's very very frequent and very convenient. So if you can't afford a car you may well be much better off transport wise in London.

I agree that London house prices (and rentals) are, IMO, unjustifiably expensive. A lot of people are coming to the city for work - quite reasonable - but when you have, eg, 3 young professionals in a flat share they will inevitably have greater purchasing power than a family with 1 or 2 earners. This disparity increases if those young professionals are earning above average salaries. They may be willing, like other people have mentioned, to spend a few years here then move out and they accept the financial hit of paying £700-900pcm (or more!) for one room for the time being.

Some people are hugely underestimating the relevance of community. A lot or people, across the UK and the world, don’t move away or far from where they grew up - or they do and then move back. Sure, plenty of people do move far away, they even emigrate, but a lot of people also don’t.

I grew up in London. I still live here because... where else am I going to go?! I have no real reason to leave because at least there is a lot of work available here for me, plus I have all of my family in this city. I could move to a few cities in the north in terms of reasonable job prospects for my profession, and I’d definitely be able to afford to rent something bigger and nicer. But then I’d be in a place I have zero connection to, hours away from family, and career progression would be more limited than in London. It just doesn’t make sense to me.

I grew up on a housing estate and live on one now, and I’m not sure where some posters think people with limited finance will have the resources let alone the rationale to move to a different city. It might not be great here, but it is what it is, and at least people have their friends, their family, and they know the place. Why exactly would someone renting a small flat, working in a low paid job, who has lived here all their life, with all of their experience and connections here, say, “Hey, do you know what, I reckon Manchester has got to be better than this”. And genuinely, is it? Yes the rent is ridiculous, and is subsidised by Housing Benefit/UC really. But is being poor or low paid in Manchester better than being poor or low paid in London? I have my doubts. So people just keep on keeping on.

Hopefully the ridiculous house prices will combine with the pollution and overcrowding to force wealth and activity to spread.

Interestingly, that is what I'd expected to have happened already - those who would have aspired to London home ownership in the 1990s to move away in order to buy, forcing economic activity to follow them if businesses wanted to be able to recruit.

But so far it doesn't seem to have happened! Why? Higher 'tolerance' for renting rather than buying than you might have expected, perhaps because of the support networks point; location ultimately more important to people than size of house/garden; huge amounts of parental money helping to finance adult dc house purchases?

And growth of home working means people can move out of London but feasibly continue to work for London based businesses, which has perhaps slowed down businesses' decisions to move away.

A lot of people are coming to the city for work - quite reasonable - but when you have, eg, 3 young professionals in a flat share they will inevitably have greater purchasing power than a family with 1 or 2 earners.

Interestingly, I think some councils are now considering imposing (reimposing??) planning permission requirements to convert from single/family dwellings to hmos (eg 3 unrelated adults).

The problem is whole swaths of the south are now caught up in London prices. Which is great if your a London worker, but if your a self employed tradesman who just happened to live and start your business there then your screwed. You can’t move as your clients are there and moving means making staff redundant. Plus you’ve built a life there, may have aging parents and kids growing up.
If you look, it goes as west as Basingstoke now, south as the coast, east as Colchester / Chelmsford and north as Luton ( you’ve then an extra blip because of oxford and Cambridge)

That’s a huge section of the country that’s pretty much unaffordable for most of the country.

I used to live in London in the 60s as a child .Houses there were slightly higher but nothing like the astronomical prices being asked now! The trouble is that it is a major city like New York or Tokyo .Dont forget the 80s redevelopment of areas like the Docklands ,to make way for Financial Institutions has increased the value /earning capacity of London life .The prices simply reflect this .Many people will spend their 30s and 40s there and earn high wages and then may retire comfortably at 50 if they can .

If someone is willing to pay pretty much everyone will accept that higher price. People do the same across the country.

There’s still plenty of teachers and nurses etc living in houses in London but time will tell as they sell them at higher prices and it gets worse for the next generation (or pass them on to dc too).

Plus you’ve built a life there, may have aging parents and kids growing up.

True I hadn't thought of that but the 'support network' works both ways - by the time you are in your early 30s you may feel responsible for parents etc (though many will still be relatively young, health conditions do start developing).

The UK housing market is unjustifiably inflated in general.

We moved away from the SE years ago as we could only afford tiny key worker accomodation and wanted to buy a house before having dc. We were able to move and buy a 3 bed home in a nice area with good schools and garden/parking etc for well under 200k. That same kind of house is now well over 300k to buy but salaries in my job have probably only gone up a couple of thousand in the same time.

We used to visit friends in the SE and spend the whole time gasping at how expensive seemingly normal homes were, and how much more you could get for your money further away from London. That just isn't the case now necessarily. Prices in the SW are not noticeably or significantly cheaper than SE in many cases.

We were so lucky to benefit from key worker housing, really reasonable rents and parental support to buy 20 years ago and will always be fine as a result. But if we had to do it again now there is no way we would manage it.