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?

@serenada Because people simply can’t shake this obsession with throwing all their money at a house. It’s such a middle class thing to do and shows financial illiteracy.

If you look at people who are slightly more financially savvy, they never put a significant chunk of their money into their primary residence.

Let’s take GrumpyHoonMain’s example, she said her house made her £200k in 10 years. Let’s assume that she bought a £200k house to begin with and therefore made a whopping 100% profit. That’s amazing right? Well, no. Actually, that gain is meaningless. Let me explain:

1. Unless she downsizes, that’s money she will never see. So it’s completely illiquid.
2. While her house was appreciating, so were other houses (assuming you’re buying in a similar area). Let’s say there was another amazing house that she wanted to buy earlier but couldn’t afford it because it was £300k back then and she didn’t have enough deposit etc. That house is now £600k (100% increase). The price difference between their houses have now doubled but she can afford to still buy this house because she has a bigger deposit (the £200k) but she also needs to take out a bigger loan (£400k which is the entire value of her old house). The only advantage that 100% growth gave her was a bigger deposit.
3. Now let’s say instead of buying a home for £200k, she had put £75k in a portfolio and £125k on a house. She would have had a £250k house (gain of £125k illiquid) and at least £150k (most portfolios double every 10 years) that was actually cash you can use.

We bought our current house (zone 2, renowned for good schools and transport) in 2017, and had it valued exactly a year ago for our remortgage, which came back at exactly what we had paid for it, despite having done quite a bit of work (so a loss in real terms).

@tenbob What work did you have done? I'm curious to know.

@Smallgoon You can put it down to whatever you like. It doesn’t change the facts but it might make you feel a little bit better about your life.

I thought Grumpy had saved that 200k?

You'd be hard pressed to have bought anywhere in London in the last 10 yrs & not made 200k. Prices went made around 2014 I believe.

@inglory

I thought Grumpy had saved that 200k?

I have saved 200k and made 200k on property which I used to upsize. Not touched my savings

I have saved 200k and made 200k on property which I used to upsize. Not touched my savings

Oh dear. @plainsailing01 will be devastated...

[quote plainsailing01]@serenada Because people simply can’t shake this obsession with throwing all their money at a house. It’s such a middle class thing to do and shows financial illiteracy.

If you look at people who are slightly more financially savvy, they never put a significant chunk of their money into their primary residence.

Let’s take GrumpyHoonMain’s example, she said her house made her £200k in 10 years. Let’s assume that she bought a £200k house to begin with and therefore made a whopping 100% profit. That’s amazing right? Well, no. Actually, that gain is meaningless. Let me explain:

1. Unless she downsizes, that’s money she will never see. So it’s completely illiquid.
2. While her house was appreciating, so were other houses (assuming you’re buying in a similar area). Let’s say there was another amazing house that she wanted to buy earlier but couldn’t afford it because it was £300k back then and she didn’t have enough deposit etc. That house is now £600k (100% increase). The price difference between their houses have now doubled but she can afford to still buy this house because she has a bigger deposit (the £200k) but she also needs to take out a bigger loan (£400k which is the entire value of her old house). The only advantage that 100% growth gave her was a bigger deposit.
3. Now let’s say instead of buying a home for £200k, she had put £75k in a portfolio and £125k on a house. She would have had a £250k house (gain of £125k illiquid) and at least £150k (most portfolios double every 10 years) that was actually cash you can use.[/quote]

I am probably outing myself majorly here but I have investments and the house. I have cash savings / art / wine too. I believe in a diverse portfolio and property is an essential part of this

Oh dear. @plainsailing01 will be devastated...

🤣🤣🤣🤣 I spent £1.4M on a boat last year so yes, devastated that someone’s saved £200k.

Tbf my property has gone up around 350k & I had 50k going into it, it will all be used for the next move. I see it as paper money as I can't access it unless I leave London.

& i will still need a stonking mortgage for the next move 😞

I spent £1.4M on a boat last year so yes, devastated that someone’s saved £200k.

Hahahaha! What a saddo. That’s right darling, you’ll be a billionaire at this rate by the time you’re 50 and have sold the house. Then you can buy those louboutins and that G5.

Forgot the .

Replaced an old heating and hot water system with a Megaflow system, and converted the damp Victorian coal hole basement into a tanked utility room to accommodate it (and to become a utility room)
Replaced 2 bathrooms; replaced old sash windows with new ones; did a general cosmetic tart up - painted, replaced carpets, put in solid wood floors; landscaped the garden

The only thing we haven’t done is the kitchen, but we need to get to a point when having we don't have toddlers plus no kitchen

@Pickpick101

Average wage to average house price I'm guessing would be alot easier in the 1970s despite interest rates than now with very low interest rates.

Average house price in 1973 was £9,942. Average salary was £2,080.

plainsailing01 Sat 11-Jul-20 20:13:43
Message deleted by MNHQ. Here's a link to our Talk Guidelines.

Curious to know why as a £1.4m boat owner, you ge

*you get upset at others claiming to have made money on property... Live and let live.

@Smallgoon Read my posts. I’m not upset at people making money on houses. I’m not a communist! I’m annoyed by how people propagate financial myths such as “get the biggest mortgage you can afford”, “houses will never lose money” etc.

It’s this type of attitude that results in people not having enough liquid savings or a cushion for a rainy day!

@plainsaing1

Right then plain, consider me a social enterprise project. I’ve £50 and a heartful of hope. Where do I start?

I have modest tastes. I’d like my own home (flat in London) , mortgage paid off plus solid pension.

I ‘ve 20 years to do it. My plan is to buy a small property that needs modernising and work from there.

I’m annoyed by how people propagate financial myths such as “get the biggest mortgage you can afford”

@plainsailing01 I've honestly never seen/heard anybody suggest this! I bought this year, as a FTB, and could have borrowed 100k more than I actually did. I managed to find a flat which I thought matched my requirements/circumstances, and was reasonably priced (for London). I could have gone the other way and bought a pricier, larger flat (just because I could). You shouldn't assume everyone purchases with the maximum mortgage they can get. Key for me was to keep my monthly mortgage repayment significantly lower than the rent I'd been paying (which I achieved), to allow for unexpected "rainy days", as you put it. I also didn't put all of my savings towards my deposit, deciding I wanted to use some towards reno works, and then invest the rest.

Read my posts. I’m not upset at people making money on houses. I’m not a communist! I’m annoyed by how people propagate financial myths such as “get the biggest mortgage you can afford”, “houses will never lose money” etc.

There are 3 certainties in life...
Death, taxes, and London property prices will go up in the medium-to-long term...

Average house price in 1973 was £9,942. Average salary was £2,080

It's now 247k and 29k respectively. Going by 1973 ratio average house price would be about 140k.

Re: affordability - you adjust your cloth. I don’t have kids.

I’m a doctor. I need to work within 30mins travel time of my central london employer. If I choose not to everytime I’m on Call I would need to sleep in a noisy, unpleasant room in a building adjacent to the hospital or pay for a local hotel room.

I love living in central London and can walk to work in 30mins. But I have long accepted that even a two bed flat is unaffordable. This works for me but my colleagues with kids are really stuffed.

I have single colleagues who still rent centrally - they periodically look at what they can buy and each time the do it gets smaller/ further out. I think they are mad but they firmly believe there will be a big crash and they can afford an amazing place.

My actual flat has probably stagnated in price since I bought it in 2013 but it ticks all my boxes and by simply paying my mortgage in that time I have paid off 15% of it, have security of tenure and been able to decorate it. So although not making a profit is disappointing I’k not planning to sell and I still get the benefit of living here.

@plainsailing01 Where did you go? I wanted to hear more about the £1.4m boat...