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?

@malylis

Not at rent prices upwards of £400 over the price of social housing. You should need to be able to do that on rent within the same region as social housing in that area. So my LL for example should be able to take care of repairs and upkeep and pay necessary charges for about £800pm maximum (I think you pay about £600 for similar sized LA housing) or not have this flat on their portfolio. That's £900pm less than I pay. There have been no major repairs here for a long time although the place is decent and doesn't need anything major. That isn't a complaint I'm just saying that the LL hasn't had to fork out anything substantial (say over £400) for years. Oh the boiler was replaced about 5 years ago.

Anything that exceed that amount should be covered by the LL regardless of it means they run that property at a loss. People who are rich enough to reasonably maintain several homes could afford to run some properties at a loss due to the benefit of having the asset. The problem is that too many people with mediocre resources want to stretch to try and obtain riches at the disadvantage of those more vulnerable than themselves.

That's the thing that socialism would promote. It isn't that people cannot get rich or stay rich, but you would have to use assets that involve human rights like nurseries/childcare/education (don't get me started on nursery owners who are very different to people who manage nurseries) and like housing/shelter or food.

Rather than working out how best to navigate a flawed system we should put our energy into analysing said system pointing out its flaws and insisting that politicians do a better job of making sure that people can have homes to live in

I’ve just returned from Dublin (where I’m from) after 2 weeks home over Xmas - my friends are all starting to buy/have recently bought - prices are on par with London so it’s not just a London problem!

There is a demand and people are buying all these properties at high prices - I don’t know what complaining about it is going to do - but it deffo won’t change anything! The price is the price - you have to make a decision - for me I’d rather stay in London with a big mortgage then to leave London, my job, friends etc - somewhere I don’t need a car and have everything near by - moving somewhere cheaper may work for others though

@Lifecraft

It obviously went over your head so I will explain it to you with less ambiguity. In London, you could have a tiny shithole which would be peanuts elsewhere but because it is literally next door to very nice house with all the features you could want, it hikes up the price of the shithole. This makes it impossible for someone relatively poor and local to buy the shithole because even though it is cheaper than the nice flat with features opposite, the fact the nice flat is there, and the nice house is there, the shithole that will only ever be tiny and clean is ridiculously expensive. So that shithole is the greasy spoon with the £30 cheese sandwich which is priced that way because next door they sell lobster (in the nice house) and opposite, they have a pop up vegan street food place (the nice flat).

If it was the way you are saying, a shithole would always be a shithole and you'd be able to buy it for Up North prices. Sometimes I watch HUTH and see beautiful places for under 250k. I remember one flat in particular which had to go under stamp duty but would have been worth a million easily in Tower Hamlets and several million in Central London.

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 ?

Some get council houses, if they are very lucky.

Most commute a long way. In a hospital in Hammersmith many nurses came from east London/Essex.

Some raise their families in small properties to be in zone 3.

I think YAB a bit U about central prices. No one needs to live in central London. But when you see normal family homes for 700k+ it does feel pretty fucked up.

very flawed understanding there of the difference between private landlords and the LA.

LA owned flats cost less to operate because of economies of scale.

It is possible to buy in London, young teacher couple I know just bought a 2 bed in Highams park witha 10 percent deposit for 280k

people who have to make choices & buy where they don't want to be aren't going to see anything like the historic price gains that older people have experienced.

Hard to say - I don't know that people were predicting 10, 20 or 40 years ago that prices would increase so much. It is all quite hard to forecast.

Older people still faced the same issues though, rent where you would like to live, make compromises to buy.

In the 1980s London had a population of 4.5 million, its now 8.6, it really is down to supply and demand.

Oh and the ripple out effect.

If you think London prices can't get worse, look at San Francisco, which is what happens if you have a long running economic boom with accompanying influx of high salaried jobs, combined with a backwards looking local government that can not or will not deregulate the housing market to allow development of new homes to compensate.

London has some way to go before reaching San Francisco levels of insanity.

Hard to say - I don't know that people were predicting 10, 20 or 40 years ago that prices would increase so much. It is all quite hard to forecast.

My property went from 400k to 800k in 4 yrs & stagnated for the last 4. It's not going to be worth 1.2m in 3 yrs. In the past we had cycles but during the last financial crash property was propped up. The average age of a London buyer is getting older.

it really is down to supply and demand.

Way too simplistic

In the 1980s London had a population of 4.5 million, its now 8.6, it really is down to supply and demand.

Put like that yes you would have thought so - yet as pp above, some studies suggest that it isn't - it is really down to low interest rates. It has to do with effective demand, I suppose, which low interest rates have increased. And possibly the tax treatment of btl - although that is changing rapidly which may itself lead to landlords selling off. And the rise of air b'n'b - and no doubt many other variables!

San Francisco is indeed worse than London but it does have the highest salaries in the world. Besides people aren't complaining about the affordability of Knightsbridge just a bog standard small house in zone 3 or 4.

@malylis

Sounds like a couple with great credit managed to buy a flat in a London suburb for roughly average prices for the area. That's a good buy because the area will rise over the next few years as Walthamstow grows. However, many of the properties in that area of that description are in buildings that need significant upkeep and you have to be able to afford that too. The newer and renovated ones are listed around 300k these days. I know the area quite well.

If you move away from the idea that dealing in housing is a legitimate way of making money/achieving social mobility for everyone with decent credit and a bit of savings, then the idea that you have to be able to manage housing on the same scale as a LA isn't foreign to you. It is very difficult to understand because we have such a different society now but since we stopped building our own shelter where we find space, and people OWN land, it has been used to capitalise on inequality. We need to put a stop to that. Some of the worse people in terms of employers and LLs are those who genuinely cannot afford to give their tenant or employees more habitable conditions but their need for more assets drives them more than their compassion. Richer people who just CHOOSE to let their employees or tenants suffer are scumbags too but the idea that your need to be richer is more important than the suffering of your employees or tenants are worse to me. I think it is because when I was young my mum's friend had a fire in her private rented house and for some reason we all had to go to her LL's flat because she wouldn't answer the phone. I just remember the LL answering the door and the strong smell of just a dirty, damp home with a few kids clambering on a broken sofa and chairs. It was clear that the LL couldn't keep up her own house let alone my mum's friend. The house she rented from her was a complete dump. The toilet was always blocked because they tried to move the bathroom and the plumbing was shit.

The rapid population growth in London since the 1990s has not been matched in numbers of new housing available and that's one big contributor to house prices and rents going up. That's also why there's been such an increase in HMOs and house shares. I don't think controlling prices themselves would be right for lots of reasons (for example recent buyers would end up in negative equity) but continuing to address the issue of empty properties would help a little to at least make current property available to people; and many councils are already doing this by making changes to council tax on empty properties.

It's very much been a seller's market for most of the past two decades, too. When I bought my current house five years ago (zone 4, not that nice at all area, ordinary 2 bed terraced house) all viewings were open days and I lost out on the first two houses I offered on to others who had offered over the asking price... Not much you can do in that situation if you want to buy in your chosen area but to offer the asking price or over, too, and prices on the whole keep going up.

Sorry but if you want to live in London with all the benefits London has then you pay for it.

Where I live has minimal culture, rubbish infrastructure of all kinds, mostly low paid work but I can actually afford a nice house. That's the trade off.

And yes it is supply and demand. Demand is high and outstrips supply hence higher prices. It really is that simple.

Only read the first page and there are some frightfully huge leaps of fancy.

You can get a house share for much less than £800 per month.
(Dds friend pays £500 all bills included)

As a baby boomer in 15 years I am hoping I won’t be dead.

If you are waiting for something to flood the market you are going to be waiting an awful long time.

A flat in Edgeware for £500,000?
There are houses for less.

Most of my friends are single parents who live in London on quite modest salaries.

Some are in very poorly paid jobs.

All are on HB

They seem to manage quite well.

I agree there should be tighter regulation but you are never going to get to the point where housing isn't a way of making money. Sorry.

It isn't way to simplistic to say that the population increase is behind the large increase in prices over the same period. It really is the largest determinant of demand.

You can't get many house shares for 500 pcm all bills included this was below average back in 2010.

www.google.co.uk/amp/s/www.independent.co.uk/news/business/news/uk-house-prices-rise-interest-rates-mortgages-bank-of-england-a9258196.html%3famp

oliversmumsarmy is a landlord. They always tend to appear on these threads & blame everything but themselves & because they know "poor" people who can do it you can do it too.

I'm lucky & have lots of equity. I also recognise that it's significantly harder for people younger than me or who didn't have the opportunity early on (I'm in my 30s).

Oh dear, confusing research which looks at the whole of the UK rather than London alone isn't a great way to counter my point.

This is not a London issue. Look at the prices of houses in Paris, New York, Sydney, Vancouver. It’s a global issue driven by demand.

City living has become a lot more expensive over the last few decades! In the 80s no one wanted to live in inner city areas and places that were once bywords for poverty and deprivation (Brixton anyone?) are now very expensive.

Oh and to the point on the Highams Park buyers, no this wasn't a place that needed significant upkeep, but all bought homes need some work at some point. People without good credit don't get offered mortgages!