London Property market - your thoughts

[SarfEasticated]

We have a small 2 bed flat (ground floor of a Victorian terrace cost us £140k in 2002 now apparently worth around £350k) and I would like us to move somewhere bigger. When we first moved to our area the houses were £250k - they are now in the region of £750k. It just all seems to ridiculously inflated for my liking. I still earn the same as I did when we originally moved in although my DH earns a bit more, the interest rates are lower, so our mortgage is more affordable but still. Do you learned ladies think that the London prices will ever come down?

Friends and acquaintances who moved out of London for more space etc in the last few years are now locked out of ever living in London again. And they still come back to London over the weekend for the amenities.

Don't move out. Extend instead if you like where you live. Or move to an up and coming area in London with good transport links.

If you intend to continue to work in London, the crazy increases in rail fares also dilute the advantage of reduced real estate prices outside of London. You just end up paying for your season ticket instead of investing it in your home.

All good advice, thanks all, extending must be the way to go.

"Friends and acquaintances who moved out of London for more space etc in the last few years are now locked out of ever living in London again. And they still come back to London over the weekend for the amenities."

Your friends have more space than you and they can still use the same London amenities that you can.

And it's absurd and ridiculous to say they are locked out forever.

"If you intend to continue to work in London, the crazy increases in rail fares also dilute the advantage of reduced real estate prices outside of London. You just end up paying for your season ticket instead of investing it in your home."

Crazy increases? Prices rose 4% last year, and 3% this year. Hardly crazy.

A season ticket from Redhill costs £2,500, a London Z1-6 travelcard is £2,224. That's an extra £276, which won't buy you much in London....

Prices are artificially inflated and I do think that will have to reverse once rates rise and the govt stop with the schemes designed to keep prices high.london has always been higher but it is now ridiculous. A house is a good investment if you intend to downsize at some point and live off the money otherwise you scrimp your whole life to pay care fees and inheritance tax. I think rates will be the key. I wouldn't buy in London now though if it was a stretch.I have an old economist guy who took a liking to me in the early 2000s and has advised me all along buying and selling and he has always been right so far. We really need to tackle rents in this country and stop with the help to buy nonsense

I'd like to think they will come down but I don't know when. Help to Buy barely affects property in my neighbourhood and many others as only small one/two-bedroom flats are beneath the £600k cut-off points. Likewise, it's hard to know how much interest rates will affect buying as so many people seem to be cash buyers or have huge deposits. It is absurd.

OP: in your position, I'd consider extending either into the gstden (if you have one) or, more ambitiously, digging out the basement.

The high end central market is its own thing really but there are many people with huge mortgages living in outer zones who will be in trouble once rates rise. I am hoping for a rise this year and next as I think people who have over borrowed have been supported too long and while rates have been low have had a chance to pay down masses of debt while savers have been shafted. Our children will never be able to buy if someone doesn't see the light and allow the house price boom to be sacrificed in fairness to all.

I'm not convinced noddy. I have been helping a couple of FTB friends look around. They are not buying in glamorous postcodes but are continually losing out to cash buyers and people who only need very small mortgages. The last two flats I have sold have gone to people with more than 50% deposits and at the auctions I have been to - where you more or less need to be a cash buyer - prices have been going through the roof. There is a lot of funny money sloshing around out there. It is not a very original observation but London does not feel like the rest of the country.

I agree London is different but I think over all house prices will eventually normalise. Very small IR rises will cause repossessions. Low IRs have been very damaging

The thing is though that salaries in many sectors have been held down and I think there will be wage inflation as interest rates rise which will safeguard many. At the same time house prices will probably stabilise again until the market corrects further. There will be economic growth for the next several years, the UK is moving to a position of strength and at the same time we are increasingly overpopulated. Prices I think will continue to rise especially within the M25.

Even with an interest rate rise - and who knows when that'll happen, personally I don't think it will be any time soon - the London (and the area within M25) is so strong it would cope currently with any repossessions the interest rate rise would bring.

I really don't think the property market will be going down any time soon. In the short term it will keep going up.

What interests me is what will happen in about 5 to 10 years, when there is the possibility of a huge crash, if you believe the Armageddon economists. But who knows. The best thing to do is only buy at a price you can afford, factoring in an interest rate rise.

We moved to near suburbs from zone 2, just inside the m25. Our 6 bed house with plenty of space was the same price as what we sold our 2 bed flat above a shop in London for. I think this is crazy. We are talking about what 20/30 miles further out? I still work in the city and my commute time is actually quicker on the direct overground near my house than the god awful tube from zone 2 was. Price is about the same I think as I don't need a tube portion of the ticket as walk to work from the London Station. I pay £160 a month. There is no way that money would allow me to service a mortgage on a 6 bed or even 4 bed house in London. I regularly go out in London after work and it takes me 40 mins or so to get home. Again, no different from central London to zone 2 really (although admited there was more to do on doorstep in zone 2).

I used to think it was really boring out zone 6 way and really resented having to move out to be able to afford a family home. But now, early forties, I am glad. at least we have a chance of paying off some of the mortgage and won't be crippled if interest rates rise. And out dc have plenty of space but can easily get into London when they're older (trains run all night as near gatwick - no running orast midnight tube or expensive taxi like when I lived in London - though I think the tubes run later now)

What do you mean it would cope with repossessions?

There are many buyers queuing up for properties at the moment, so those excess buyers would absorb repossessions coming on to the market.

Yes but where would the repossessed go and what would their life be like! There has definitely been a shift up in the SE where I am the last year but its not London and it wont last. There was a definite lull when I bought last xmas and now I see it has gone up 50% with a very basic refurb Crazy.

Noddy, what you're not considering is the huge strength and buying power of BTL. As others have said, there are huge numbers of investors lining up for most London properties and the demography of London makes it a consistently good market for landlords across the price spectrum.

Without radical reform of BTL, the situation in London and the SE won't improve for owner occupiers (incl FTBs) any time soon.

yes BTL is a nightmare Here there are literally 100s of student houses but I am looking to rent in the New Year and non student houses/flats are sitting on the market for months. I think people went mad with BTL here!

Letting in general needs regulated. I sold a house 2 years ago bog standard 3 bed period terrace. It is now for let as a 6 bed with no further work done to it

I think there may be a small amount of price drop, but certainly not the tanking that the London market probably needs.

And yes BTL landlords are waiting in their droves to buy in certain areas.

I understand there are a lot of people to let to buy, they are remortgaging the house they now live in to fund a new home, then renting out their currently home to move into a mortgage free new house.

That sort of thing is infuriating.

The London housing crisis will not be rectified anytime soon due to the foreign investors seeing London housing as a safe fax-free haven for their money, and the govt being keen to encourage them to keep on doing this.

*tax-free

Would you really need to buy a car if you moved only a mile away?

Anyway, unless you would consider moving further into a substantially cheaper area, I think I would look at extending. The process of moving, with stamp duty etc could cost as much as an extension!

Actually the area we were looking at is 3 miles away with no direct bus route. Driving 13 mins, public transport 58 mins. I am actually quite excited about the prospect of an extension now!