London property prices are STILL going up!

[teapotl]

I live on the zone 2/3 border in what is now considered a desirable part of London (but didn’t used to be). I’ve been keeping an eye on the market over the past 4 years and property prices in my area have continued to rise and rise. I thought the London market was meant to be falling due to Brexit and now Covid, but it doesn’t seem to have had any effect at all. Will London prices ever plateau or are they just destined to go up and up forever?

With the government due to announce a stamp duty break this week prices will go up like nothing we have ever seen, instead of paying the stamp duty tax sellers will now increase the prices of their houses to take that into account, more profit for homeowners subsidise by the tax payer unfortunately.

You’re right OP. We’re also zone 2/3 and I’ve been watching prices for the last 6 months and recently they’ve been going up and houses are selling so quickly as well. A house we looked at in January that was taken off the market because they couldn’t sell it went back on about a month ago and was gone in days. It’s crazy

If Brexit and a global pandemic don’t take the heat out of the London property market I don’t know what will.

Completely agree about stamp duty too @jimmyjammy001.

A house we looked at in January that was taken off the market because they couldn’t sell it went back on about a month ago and was gone in days. It’s crazy

Houses on my street also seem to be selling within days. One of them was a total wreck that needed a lot of work and it was gone within two weeks.

Also though - who are these people that can afford to pay £700,000 for a two bed flat and how do they do it?!

Yes, prices are shutting up by 50-100k .... lots of 2bed flat in naice parts of London are now 650-700k, but prices for houses have also shot up since the lockdown. Not sure who can afford 650-700 for a two-bed flat, with some of them people are clearly seeing that as instead of a house i.e. a nice two-bed flat with a garden near a nice school is still much, much cheaper than a house. No idea whether people that live in them plan to move to a house in a few years or stay put.

There are also plenty of 30s something couples on a 150k joint ncome for whom 700k budget for a two-bed is not insurmountable - so they can buy in places like North/West London. We looked at a two-bed marketed at 700k in Hammersmith and one of the bedrooms didnt even have a window - those that did are going for 800k....madness.

People also seem to be rushing out to buy - even two-beds without gardens and things that have been on the market for years....who knows whats going on or whether it will calm down or drop in a few months.

OP, what do you mean by prices going up? Asking prices are basically irrelevant. Actual sale prices are what matters, but it takes the land registry about 2 to 4 months, in ordinary times, to show them, so not many sales completed after the beginning of the lockdown will be available now.

My very personal crystal ball tells me that a slight pickup in sales now isn't too surprising, as many people who needed to move will have delayed buying and selling, but the real test will be in the autumn and winter, when furlough ends, many redundancies are likely, and banks may well be more stringent in their criteria.
The same crystal ball tells me that banks are likely to give a bit of leeway to existing borrowers, because of political pressure and because it is not in the banks' interest to repossess immediately and exacerbate a decrease in prices, but will be stricter when it comes to new borrowers.

It will be interesting to see what will happen to people who risk becoming mortgage 'prisoners', i.e. people who are about to move from a low fixed rate to a very high variable rate, and who might not meet the bank's new criteria for a new lower mortgage deal.

"With the government due to announce a stamp duty break this week prices will go up like nothing we have ever see"

I am not so sure. There are rumours that the stamp duty will be temporarily suspended for properties up to £500k, so there won't be much of an impact on properties priced much higher.

I'm a FTB. Hesitated on a house due to CV19 and concerns about a recession even though my job is relatively secure. Its gone now and I don't know whether I made the right decision. If prices go up significantly probably not. If they have dropped by this time next year probably yes. I'm buying on my own and not brave enough right now.

@ParentOfOne - our experience is that having put in five bids at asking price - they all went to sealed bids and sold for a lot more. So in some parts of London people are happy to pay 650-700k or even more for a two-bed property (house/flat - we offered on both).

Not sure whether the stamp duty holiday will have an impact - at 650-700 we dont get any relief even though we are FTB and are only after a two-bed. But it might filter through the system.

@allGreenhats10, wow I wouldn't have imagined. May I ask in what area?
Two-bed flats? Newbuilds. Victorian, with or without garden?

Also though - who are these people that can afford to pay £700,000 for a two bed flat and how do they do it?!
My stepson bought a flat just under £700k - bank of Mum and Dad, otherwise it wouldn't have been possible. Seriously think property prices need a good overhaul. It used to be that two people in good jobs could get something really decent, and it's ridiculous now.

I think house prices in London will always be on the up. Flats/apartments OTOH not so much, unless they have outside space of some sort. I'm also in a zone 2/3.

House prices always increase in the long term. Therefore, if you want to buy go ahead and buy. No point waiting for a drop

@ParentOfOne - so with flats - we mainly looked in West and North London and ok these were 'naice' areas and not new builts but many of these places didn't have a garden or anything. In SElondon - two/three bed houses are flying off the shelves around the 600-700 price range...

We've just been genuinely surprised - it's like the pandemic has spurred people on to spend 50-100k more on a two-bed place that werent all that cheap to begin with.

@NotSuchASmugMarriedNow1 - true, but the housing ladder doesn't work anymore, so you might end up being in your property for years to come.....just getting anything is not as easy if you end up having to live there for 10+ years.

but I have been surprised that even two-beds without a garden have gone up...

I m pessimistic about the outlook for the UK's economy, between the virus and Brexit. I wouldn't buy now and I would certainly not participate in bidding wars. If I were absolutely forced to move because of life events, I would at least wait till the end of the year. I think the full impact of the virus is not yet visible but will be once furlough ends.

Also don't forget that, for shortish periods of time, renting can make a lot of sense, especially if there is huge uncertainty about the economy house prices etc.

Say you buy a £700k property. You spend £25k of stamp duty and another £15k between redecoration some minor works, etc, so £740k.
After two years the economy is in the toilet and the house is worth 5% less, so the house will have cost you £35k (price depreciation) + 25k stamp duty + 15k moving costs = £75k + the cost of the interest on the mortgage.
With that kind of money you can easily rent a comparable property for 3 years at least till you see what happens.

Of course that's just my opinion and not everyone agrees with it.

@ParentOfOne - you are of course absolutely right - hence my surprise that everyone is sooooo desperate to pay over the odds for what are pretty expensive places. But people are probably scared that 50k today will end up as yet another 50k by Xmas etc......personally we are already feeling somewhat priced out compared to last year so I can see why people are panicking

I’m also interested to see what happens to prices of places slightly further out. We were pretty set on the areas we were interested in mainly so I’d have an easy commute into London but now I’m not going to be going back into the office full time I’m much more open to living somewhere with a bit of a drive to the station if it’s only going to be for two days a week. Whereas previously we were only looking at houses walking distance to a good train line

@Focusanddetermination I can totally relate to your predicament. I too was a FTB and was ready to purchase 3-4 yrs ago but prices were sky-high (the peak before Brexit) and then obviously Brexit happened. Everyone and their dog told me to sit tight as the market was about to crash. I waited, and waited, and waited. Whilst I noticed a slight drop post the referendum (presumably necessary since prices were unrealistically high), I didn't notice significant drops in London, though I did notice properties were taking longer to sell.

I made the decision to bite the bullet towards the end of last year, mainly because I felt it was a buyer's market judging by how the properties I was 'watching' were not shifting.

I did consult with those I trusted before purchasing and the general consensus was that if I felt I was getting a good deal, that I should go ahead, but otherwise I should sit it out. I did feel I got a good deal so went ahead. I don't have any real regrets. London is a tricky beast and essentially, I needed a home - that was my priority over making an 'investment'. I would hate to be in the position I was in back then, in this moment in time. In fact, I'd be going crazy right now, anxiety around not knowing what to do, whilst still paying throwing away money on London rent.

@TimeWastingButFun My stepson bought a flat just under £700k - bank of Mum and Dad, otherwise it wouldn't have been possible. Seriously think property prices need a good overhaul.

See but even this doesn't make sense, unless 'bank of Mum and Dad" means parents are handing over hundreds of thousands... !!!

Sheesh, I was left nothing when my Dad died and my mum has nothing to leave. Good thing I spent the best part of the last decade saving otherwise I wouldn't have had a hope in hell

@jimmyjammy001

With the government due to announce a stamp duty break this week prices will go up like nothing we have ever seen, instead of paying the stamp duty tax sellers will now increase the prices of their houses to take that into account, more profit for homeowners subsidise by the tax payer unfortunately.

It's capped at £500k so essentially a piss in the ocean. Certainly wouldn't push forward those (especially not 1st time buyers) waiting on the sidelines anticipating drops of 16% that the bank of England predicted in the aftermath of all this.

Lets do the current stamp duty numbers, on a £300k house example.

1st time buyer: 0k

Previous home owner: 5k

I'd have thought there should be great uncertainty in the London market. If people dont return to their offices or end up working, say a couple of days a month, in London surely not needing to live in London for work must have an impact on prices.

Before every crash there has been a period of steep increases, although the crash has often been predicted much earlier than it actually came.

I'd be very reluctant to buy in the London market atm.

Will the £500k stamp duty limit make much difference in London? Surely almost everything qualifies for stamp duty already.

"but now I’m not going to be going back into the office full time I’m much more open to living somewhere with a bit of a drive to the station if it’s only going to be for two days a week."

My very personal view is that all this hype about a revolution coming, the cities are dead, everyone will work from home etc is just hype. Remote working will definitely increase but I don't think we will transition to working from home 90%, for a number of reasons: from managers wanting to see their minions to get an illusion of control, all the way to the fact that too many jobs require constant interaction, to the fact that some jobs require specific software or network access which means working from home is inefficient. If you have 10 years of experience you can probably work from home just fine, but how do you train juniors graduates etc?

Even if we ended up working from home 50% of the time I would not want to live in the middle of nowhere and spend crazy amounts of time commuting; if it were only 3 days per month I'd think about it, but I very much doubt it will be.

So for me the best compromise remain, if you can afford it and I get it not everyone can, those zone2/3 areas (or equivalent in other cities) where you can still buy a terraced house or a maisonette or a flat with a little bit of outside space BUT getting to a central London station takes a 15-20 minute tube or train journey, which probably means 30 to 45 minutes door to door.

Of course that's just me and loads of people will have different opinions and preferences.

@ParentOfOne - absolutely - well the revolution maybe coming but probably with the fact that more things can be automated.

But I think that it will take people a bit of time to see travel on the tube as something normal or at least tolerable and until then people will probably WFH and places like Oxford street will suffer.

From what I've seen the flats that are dropping in value are those in zone1 next to 'fun' places or those relying on renters, foreign students and cash buyers.

but i do still wonder - how many people can afford to pay 700k for a two-bed flat and WHY