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?

Yep low interest rates have had no impact on the London housing market.

Again not what I said (strawman fail), the population increase is the main determinant of demand, didn't say it was the only one.

Where did I say low interest rates were the only factor?

The demand is caused by the ever increasing concentration of the economy towards London. If the economy was structured in a better way then there would not be such a pull of people towards London/SE.

You didn't but I didn't say population growth was the only factor, said it was the major one. House prices wouldn't have gone up at anything like the rate it has if population hadn't about doubled.

Completely agree with SleepDeprivedElf.

Unfortunately London has always been the UK's major commercial centre and as the effects of globalisation have been felt cities have become the major points for the knowledge economies of the developed world.

Most of my friends that can afford to buy recently have never been offered a mortgage at 10% deposit regardless of their current income. My highest earning friend got 18% and she cried with joy at that.

Its certainly possible, quick look online shows that

The problem is that it is not sustainable, and you end up with very divided lines between haves and havenots, exacerbated by the sorts of issues regarding housing policy already mentioned. Successive governments have chosen to prioritise the financial industry at the expense of others.

There is a huge amount of foreign money in London property, it is seen as a safe investment. Many of the truly expensive properties say £20 million plus are owned by unknown people through trusts and companies. Therefore merely wealthy people have to buy smaller, cheaper houses/flats. The new government really needs to reduce the massive inflow of this money, much of which is dodgy this might help reduce prices

CurlyhairedAssassin

Still wading through the thread but I found this interesting, @Toomuchtrouble4me:

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.

You’re part of the problem. The more people like you buy up multiple properties in cheaper parts of the country to pay for one overpriced one in London, the fewer houses there will be for more families to buy in those places elsewhere. Prices go up in those once cheaper areas because of supply and demand and what has been achieved at the end of it? Normal families are now unable to buy In the cheaper areas, and got 3 other households to pay off the multiple mortgages for YOU while they could have been paying it off themselves if they’d owned the property rather than renting it from investors like you.

You’re no different from the super rich buying up properties in London and putting the prices up there. Only difference is that they may leave their multiple properties empty OR they may rent them out to other mobile rich people for a few years who will have the disposable income to prop up the local economy. The people paying your mortgages for you for years have nothing to show for at the end of it and have probably minimal disposable income at the end of every month to use in the local economy, as rental prices are usually more than what their monthly mortgage cost would have been.

It’s not ethical. Before anyone says it, i am not jealous as my mortgage is paid off and I have enough money from an inheritance to buy another property outright as rental income. I refuse to do it. It isn’t right. It would only make the affordability of housing worse here, and that would make me a massive hypocrite because we bought our property at the start of the 2000s before prices went silly everywhere. We couldn’t actually afford to buy our property now if we had been starting out now. We would have been stuck renting, from landlords like you sitting back in their overpriced house elsewhere, probably

I can’t see that it’s not ethical - the point is that we wanted to live where were from, near our family and where our roots are. But we can’t afford to buy here in London, we’re in an affluent area and property prices are crazy - so we bought in Manchester when our son was at uni there, it was a big renovation job but it worked out well and saved paying rent for his accommodation. it was successful do we did it again and the two rental houses pay for our rent in London.
I’m not really bothered if you disapprove, Im here to look after my elderly mother and stay close to my friends and family in the only way I can afford and it’s worked well for us.
Eventually we’ll probably sell the Manchester properties and move to south coast when we retire but that’s a long way off, for us, we want to stay in our part of this amazing city.

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)?

This is what I would like to happen. The government announces a huge social house building programme in employment centres, including brownfield sites, suburban ones and yes central ones. These properties are well insulated and designed and once built are designated as public housing and can never be sold, only rented at low rents to those who need them on a means-tested basis. In places like London housing density would need to significantly increase. There would be full security of tenure which would be lost only on exceeding a certain income threshold. Potential inherited wealth would be included in the eligibility. Single working people on £30k wouldn't be any less or more prioritised than those already getting benefits. A national housing agency would administer these properties, looking after their maintenance and ensuring a good social balance of tenants.
I realise one side effect if this would probably be a reduction in prices of owner occupied properties due to the massive increase in supply. Well I don't see how this is worse than the current situation where the government electorate and society has effectively said it is ok that a basic human need is only accessible if you are mega wealthy in the places most people would most like to live. Imagine if food or fuel costs were pegged at the price you first boight them at so 55 year olds paid £10 for a tank of petrol or basket of groceries while 25 year olds paid £500.
IMO until enough of the voting electorate and media classes' children are priced out of anywhere they would like to live, the situation won't change. It is causing massive misery and I don't understand why there hasn't been serious social unrest iver this.

Here in lies the problem "like to live". It is doable to live in London on low incomes (plenty do it), its doable to buy as a first timer, just where people would "like to live" is always somewhere in demand.

@Alanis126 Potential inherited wealth would be included in the eligibility. are you off your rocker?!? Other than that I hear you, interesting idea. I would not be ideologically opposed to it, personally.

@maylis agree, on a previous post I pointed out one and two bed flats, nice condition, with parking, that you can buy in zone 4 a 30 minute door to door commute to Liverpool St Station for 200-250k and there were many very vocal sneers that "a graduate wouldn't want to live there"

OK fine, don't, but you'll probably be renting for a while...

Exactly.

No one wanted to live in Crouch End in the 80s or in Islington or Cricklewood, or lots of other places that are now desirable.

The desirable locations have ALWAYS been out of reach of first time buyers without significant parental help.

People bought where they could afford and they made these communities what they were. Now you have to go a bit further out, but that isn't as difficult as it was in the 80s because of the over ground/dlr etc

By the time a place is called up and coming it’s out of the reach for many. To ride the hike but where people don’t want to live. (We bought zone 2 SE London pre overground)

tbf people I know who have moved North (Manchester, Edinburgh) have either obtained a similar salary (surgeon, accountant) or work remotely

This is absolutely true. DH and I are both top 1% earners in the North West and all of our social circle in the same area are probably top 5% earners. We're definitely on comparable incomes to what we we would be on in London.

None of the places i listed were "up and coming" in the 80s lol.

Do your research and make compromises like everyone else had to.

I didn’t say they were it was a separate point.

So you can have your lol back.

Lol snippy now eh?

@Lily193 interesting to see that's your experience to. i think there is often the narrative that high salaries are restricted to London but it very dependent on sector. I think London has more of the 500k salaries but it's not like those people will struggle getting on the ladder!

Lol you did start it ;

iredtiredtired23

I think it's still a common myth but it's simply no longer true in many sectors. Having lived in London, I appreciate that there are many reasons why people would choose to stay there, but fear of having to accept a lower salary shouldn't necessarily prevent them considering a move further North.