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?

I’m not sure what is meant by “average” buyer.

What sort of “average” are we talking about?

Everyone’s personal circumstances are different and you can only do what’s right for you.

But speaking as someone who has been renting for nearly 17 years, there’s a high price to be paid in private rentals, and it isn’t just money!

but I think they do have a reputation (rightly or wrongly) as being for people who can't get a 'proper' mortgage.

That was my understanding of them so it is interesting that you say they are for high earners only.

But I am going on lots of factors including a gut instinct

a gut instinct that has been wrong, a hunch, a feeling and absolute panic.

So, there you go.

"However buying is still cheaper than renting"In the long run, almost always yes, but in the short to mid term not always

Unless we sadly have a terminal illness, we are always in it for the long run. Always. We wish to house ourselves when we are old. Housing our selves is a basic requirement, whether we live alone or ultimately with a partner or family.

In the long run, it is always cheaper. Always. A life time of rent, versus a home you own by retirement, is the solid proof of this. Yes they need maintaining, but those costs with solid maintenance are never equivalent to a life time of rent.

Along with the 100% mortgages I really think we need to start incentivising older homeowners in large properties to sell.

A whole generation really needs educating about financial instruments.

My parents are financially secure (in part because of rising property values) but they aren’t financially savvy, so things that astute upper middle class people might do to give their kids a leg up the property ladder - gifted deposits, IHT pre-transfers, the purchase of agricultural land to deliver tax-free inheritance, gearing - completely bewilder them. Debt horrifies them. I know someone who used a 0% credit card to finance a house renovation that allowed them to increase the value of their flat £100k in a year. When I told Mum about this, her first words were, “It’s not interest free, there’s a 2% transfer fee.” Which, whilst being correct, is also spectacularly missing the point, and therefore the opportunities.

@breadcakebiscuits I thought you were a high earner though?

Traditionally I think interest only mortgages were seen as negative but they make sense in some circumstances even if you have the cash.

To bring that all back on-topic, there are a lot of financially astute upper middle class people in London, drawn not just from the UK but all over the world. It’s hardly surprising it’s disproportionately expensive and it is likely to remain so.

@bilbotoy I earn well for my age but nowhere near six figures.

Oh ok, are you young because you said you've been renting for 17 yrs?

The supposedly stricter affordability tests actually worked in my favour because I could demonstrate my ability to pay a lot in rent.

It’s raising the deposit that’s the challenge, and why I feel so strongly that our parents’ generation need to accept they have a part to play. They’re sitting on free money, and should be incentivised to set it to work.

@bilbotoy Young for a FTB in London, ancient for everywhere else.

Being a high earner is all relative of course, @bilbotoy . I earn twice as much as a nurse or a schoolteacher in perhaps half the hours, but nothing like a city salary.

"So why did you single out that particular detail @ParentOfOne?"

Like I said about 3 times, to point out that the criteria to qualify for interest only are stricter so it's not an option available to most. And to point out that, however shocking it may be to you, yes, there are still people who do not understand what interest only means. I shall now ignore any future comments on this point as it's not a good use of anyone's time and I really have nothing else to add. Goodbye.

"Unless we sadly have a terminal illness, we are always in it for the long run. Always. We wish to house ourselves when we are old."
But life is unpredictable. happens. If you don't know where you'll be working 3 years from now, it doesn't make sense to buy now (unless we are in one of those periods like 2012 when house prices rose 7-9% every year, and no we are not). If you do, it's a different story.

I had an offer accepted the week before lockdown, and as I am in the lucky position of a very safe job, I went ahead.

If prices go down, they go down, but I am looking at spending (all being well, I am in my mid 40s) decades here rather than years, and it ticks all the boxes for the long as well as short term, so fluctuations don't worry me.

A huge advantage in London, even without this particular job being as 'safe' as it is possible to predict (life being uncertain), is that there are lots of jobs and a fairly high level of movement between jobs. If I needed to find another, it might not pay as much or suit me so well, but I have every chance of finding something to keep me going. Having grown up in a rural market town, I know that this isn't the case everywhere.

The “Yes, but” brigade dominate MN but I’m never quite sure what their contributions are adding to the learning.

I’m going to stop de-railing this very interesting thread in a minute, but something that makes me sore is that a lot of my contemporaries age-wise in my industry have a much higher profile or professional status or seniority than I have, which inevitably means they earn an awful lot more. They all seem to have two things in common - Oxbridge, and growing up in London and being able to live with their parents in the early precarious stages of their careers. I try not to compare because we haven’t started from the same place, but I really resent the thinking that the star players are the ones with the greatest ability.

@breadcakebiscuits

There is a lot more behind that though, Bread. I grew up in London and went to Oxford (pg).

What I can tell you is this - that fom a young age we have to deal with our lives being dominated in a way I don't see outside of London. There is no breathing space. We are run by tube and bus timetables. Everything is run on such a tighter schedule, its suffocating and it never lets up. We grow up with much more aggression in our faces on a daily basis and in an ebevironment that is constantly challenging: physically, intellectually, emotionally. I just don't see that in teh people who come to London as adults.

On top of that we know we will always have to work faster to stay one step ahead just in order to stay in the city we grew up in. Hence, I imagine, the Oxford thing.

The argument aboiut those who come to London is incredibly one sided. You got a childhood we didn't - its as simple as that. It needs to be challenged this way as it is part of that same narrative that says everyone in London is rich compared to the North.

I can tell you this - that s left London ao many of my friends left London and once they experienced the North never looked back. You don't carry teh weight of teh system in the North at the level you do in Londonand as a child that's a heavy weight that has become subsumed into your identity.

We don't get to do London for a few years, make mistakes, explore, leave a mess behind us, find ourselves, lose ourselves or anything like that. We don't get the grants and internships that I see people from outside getting (nor the supplement for benefit which I have seen).

There is without doubt, wealth in the city but most Londoners are not in that cateogory - they are ordinary working class on low, for London wages considering the costs of living here. . The wealth of the last 20 years bewilders me and I cannot help but think it is credit holding up an illusion.

I have left because I can no longer afford it and I am sick of the expectation being higher for me. It is based on a false premise and it needs to be thoroughly deconstructed.

Apologies for typos but this whole London stereotype is far too simplistic.

The government are (have been) invoking 2005-2008 all over again.

Buyer beware.

@PurpleHoodie

You mean we all need to invest and support the economy to get us back to normal?

Serenda

Interest rates have been kept artificially low to prop up high property prices.

Deflation is a very real possibility.

Yes of course there are other reasons to be in London but if all the people who are mostly there for work were to move out (they won't but a significant proportion could) it would have a huge impact on demand and therefore price.

Makes me laugh when people think only those that work in London live in London. I work for a fintech start up with a London office of 30. I'm one of probably 3 that actually lives in London. The CEO travels in from Bournemouth, the Chairman from Marlborough and the rest live outside of London (Essex, Herfordshire, Kent, Luton, Brighton etc). We even have a couple that travel in from Nottingham!

WFH as always been an option for us, I could have spent 3-4 days from home pre-Covid but the majority of us prefer to be in the office. We've even had the flexibility to take 'working holidays'. A lot of our technical Engineers are Indian and would frequently travel back to India without having to take the entire time off as annual leave.

I personally haven't enjoyed working form home during lock-down - whilst we can engage on email and skype etc, it's just not the same as being able to interact with your colleagues (particularly for a business as small and and as young as ours). It definitely won't continue this way. I'm already going crazy. I just prefer for my home to be my home, that one place I can return to after a long day and switch off. I don't feel as though as I can switch off at the minute, and I know my colleagues feel the same. Even our CEO is desperate to get away from his wife and get back to the office!

Thanks @PurpleHoodie. I need it spelt out to me

What happens when/if we go to deflation? Housing becomes cheap or debt is cheap to hold but ordinary things (a loaf of bread) become expensive?

What else happens? If it is better to hold debt it then skewers other things I suppose ? Those with money have no incentive to invest, those caught in the middle have to run to stand still?

@serenada that's exactly the same as many children growing up in the country, in rural market towns, and on the poorer outskirts of small cities. The aggro on a daily basis (my brother got threatened with a knife, back in the 1980s, though knife crime was definitely less), the bullying that left me suicidal by my mid- late- teens. Everything running on a schedule because if you miss that one bus then there won't be another, interspersed with hours with nothing to do because there are no services or activities for young people, and there's no transport to meet your friends. Straight home after school, because the only way to get home is to catch the school bus (or walk for several miles).

The reality is, just about every type of environment can be soul destroying or enriching. It depends on resources (in the widest sense) and personality.

I can breathe in London, in a way I never could in my small community growing up, where I never fitted in and was always picked apart and made to feel excluded. For others, it's the opposite. I am glad you have found the place that works for you, but don't romanticise it.

10 -15 years ago, interest only mortgages were very easy to come by, as were self certificate mortgages.
Self certificate mortgage are no longer available and I believe interest only mortgages are reserved for high net worth individuals or at the very least you are required to demonstrate. How you intend to repay your mortgage at the end of the term.