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?

How are the children of generation rent going to stand a chance?
They won’t inherit? Won’t benefit from grandparent childcare.
It is a huge ticking time bomb

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.

I disagree, I think of a lot of people (myself included) did move out of London in the 90s/00s and buy. To the extent it’s made a lot of attractive commuter towns now very expensive...such as Sevenoaks, Tunbridge Wells, Guildford, St Aubyns and many more. Most of these offer a faster commute to the capital than some London suburbs - albeit carry a more expensive train fare.

The way I look at it is the older generation with their assets can’t take them with them and they aren’t immortal so the money is coming to the younger generation one way or the other eventually

Slightly off topic but I cannot get my head around people buying new build's and how much they cost!

Where I live (NW) there are loads of wonderful older properties at a fraction of the price of new builds.

I have a friend who is semi-retired and she has just moved out of a lovely bungalow to a 3 bedroom new build box of a house which when I last spoke with her had 4 A4 sheets of paper of things that were wrong with it and needed fixing.

She paid over £300k for that, madness!

@EvilPea - life assurance - when I did the maths on £1,000,000 it’s costing me £200 a month, if I saved that for 40 years I wasn’t going to have a million pounds so I’m betting against myself but the kids will have a house deposit.

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.

I do ponder this sometimes. Yes there are lots of medium to larger houses currently occupied by one or two people - when they come onto the market that will increase supply, which may put downward pressure on prices. But the sale then generates cash which will probably be ploughed back into the property market by the bb's adult dc beneficiaries (btl, helping their young adult dc with deposits etc) - which increases prices back up again. The only money 'taken out' of the property market by a probate sale will be the iinheritance tax (probably quite substantial in London), and whatever the beneficiaries save or spend on non-property (or property elsewhere eg holiday homes).

I think the bigger impact may be older people selling their properties to pay for care homes - then the sale proceeds are not ploughed back into property purchase, but into the cost of care. If 1/6 of the population will need residential care at some point (seem to remember reading that figure) that might have some impact on prices. But perhaps not huge.

I am one of the lucky ones who bought before prices went crazy so have benefited from the boom.

My concern is that London will lose its middle band of earners and get polarised between people in social housing and people wealthy enough to buy property. I can see that might happen where I live now in Zone 3. House prices have more than doubled over the last 10 years from possibly affordable £400-600k to out of reach for many/most c.£1m+

If I was looking to live in a capital city in the UK, I would choose Edinburgh every time. Small enough to make travel relatively easy, full of talented people and good schools and all the museums, galleries and cultural experiences you could need. Relatively expensive to live in, but nowhere near the cost of London.

@Inliverpool1
I have life insurance but struggled to get any that didn’t decrease over time (to pay your decreasing mortgage off if you die) It’s a similar amount to yours a month but will pay out 100k. Seems futile now house prices have gone up so much since I took it out.

@ChazsBrilliantAttitude they have moved out and commute which is why the likes of reading, Colchester, Watford, Hatfield, Aylesbury. Are now unaffordable for local workers.

When will the bubble burst?

We live in a commuter town and many of the kids in my DDs class have parents who lived in London pre-kids then moved out. Just because people work in London doesn't mean they can afford to live there

I live in a fairly pricey area of London, Shoreditch. I own (mortgaged) a really nice two bed flat, decent sized balcony in a really nice ex industrial building. I also own a party space a short walk away and a 50% share in a flat in Stoke Newington.

I could move out of London and commute if I wanted to live in something bigger. But I wouldn’t be near friends, I would need hefty childcare for my son and due to that I wouldn’t see him as much.

As it stands I can walk my son to breakfast club at his primary school, I can then walk to my job in the city or use public transport. I can also pick him up from after school club and walk him home via the park.

My friends all either live in Shoreditch, Hoxton or Stoke Newington, so our midweek socialising would end. My boyfriend lives in Hoxton, so I’m not sure how our relationship would cope with not seeing each other most days.

My son and I have countless free or very cheap things to do right on our doorstep, you don’t get the same range in small market towns with cheap property.

People value different things, I’m not particularly interested in stuff, I’m also not particularly interested in having loads of unused wasted space in a home. I am however interested in being out and about doing stuff, not having to drive to do that or take public transport to do it is a priority for me.

What industries only operate in London, OP?
I think if this is the case and you can't afford to live in London then people need to train in jobs available nationwide.
We would have loved to live in London, our industry thrives in London, but we just couldn't afford it, so didn't go.
If people are dumb enough to pay the prices then the market value with stay high.
If everyone that could moved away, house prices would soon lower.

I have heard the "oh but when the boomers dies generation rent will inherit" line a lot. Doesn't this just mean a radical reinforcement of the class system, so the offspring of probates who own the massively inflated properties will be secure forever, those with parents in Enfield or Croydon will have something but be challlenged, & those whose parents don't own, had to sell up and use the equity for care, whose parents own but outside the high equity pockets, those who are single etc will be totally and utterly shafted? It always does my head in when you hear things like Clegg announced a few years back that people will be able to use their pensions to provide house deposits for adult children, & nobody ever says what about people who aren't in that poaition.

Would you rather the boomers spent it all on 3 x annual cruises so that their kids could a) join the queue of people needing social housing or b) join the queue of people needing private rentals (thus increasing demand and pushing up rental prices)?

(I'm not suggesting gifting your children deposits doesn't increase wealth inequality i'm just asking if you'd really rather the alternative)

I don't think houses will be on the market in huge numbers from baby boomers.
1946 - 1964 covers quite a range of ages. I'm hoping I won't be dead in 15 years, thank you very much.

and Those boomers that need care?

I live near Canterbury and the problem we have is that people buy up the modest houses, convert the to student let's which then leaves no rental opportunities for locals and what's left, isn't affordable.

@Drabarni

Some management roles are in far greater numbers in London. A company that has a premises outside London might have 1 or 2 people in a particular senior management role and they tend to stay in that job for decades. In London, the same company could have 10 positions at that level with much more regular opportunities for people to take that role and either stay or use at as a stepping stone.

It's not just management roles either. As a nursery practitioner, outside London it would have been far harder to secure the qualifications and find a local vacancy for a senior role. Many of the courses that I have done to get to a place where I am a senior practitioner with SEND qualifications (some minor clinical) were provided to me before 2010 (ahem!) for free by the LEA of the nursery I worked in as part of local and national initiatives around getting more parents into work, reducing childhood mortality and improving educational outcomes. At the time, people in the same roles outside London didn't seem to get nearly the same training as we did unless they or their employer paid for it entirely themselves.

That's why I sold London home and moved oop north.

My son and I have countless free or very cheap things to do right on our doorstep, you don’t get the same range in small market towns with cheap property.

So true. My son's independence in a small town/village would reduce so much.

Yes dandelion I know someone that does that for a living. They basically turn up with an open cheque book at an old house and big beautiful wildlife filled gardens. Knock it down or extend it to within an inch of its life.

Soon enough the poor neighbours sell up (a lot of the time they have similar properties he can swipe now for less as he’s devalued there’s)

He does very very well out of it.

I lived there for ten years but could never afford to do anything. Yes there's free activities, but you get fed up of sharing them with millions of other people and being at the back of the queue for everything. Wasn't sorry to go - would have still been in a 1 bed flat if I'd stayed.