Would you buy a house in London today?

TickersPlaysPop

When poeple quote stats for 'foreign' investment please can they say whether it is central london or London? I think the 3 % of foreign owned property in London quote would be a lot higher if it was a stat for Central London.

Mark Carney at the BOE in his interview with Murnahan said he was concerned about the amount of foreign investment in London.

AndyGuil

TickersPlaysPop wrote: »

When poeple quote stats for 'foreign' investment please can they say whether it is central london or London? I think the 3 % of foreign owned property in London quote would be a lot higher if it was a stat for Central London.

Mark Carney at the BOE in his interview with Murnahan said he was concerned about the amount of foreign investment in London.

Central is dominated by business property though.

AndyGuil

TickersPlaysPop wrote: »

When poeple quote stats for 'foreign' investment please can they say whether it is central london or London? I think the 3 % of foreign owned property in London quote would be a lot higher if it was a stat for Central London.

Mark Carney at the BOE in his interview with Murnahan said he was concerned about the amount of foreign investment in London.

Central is dominated by business property though. The big shifts in price are all over London including none "central" locations right from Balham to Shoreditch.

Jason74

AndyGuil wrote: »

Only 3% of the property in London is foreign owned. .

But in terms of the market today, the key number imho isn't the proportion of properties that are foreign owned, it's the portion of current sales being made to foreign buyers. While I don't know the figures for existing properties on a London wide basis, a recent Kinght Frank report sugests that around 20% of new build properties in inner London (not prime central London, inner London as a whole) are sold to buyers who are not resident in the UK. The same report suggests that nearly 30% of buyers of prime central London buyers (of all properties) are not UK resident.

Those percentages are certainly significant imho, and if a large part of that non resident demand were to go into reverse for any reason, I can't see how current London prices will hold up. That's not to say that it will of course (indeed, if I was a betting man, I'd suspect t hat it probably wont), but there have been scenarios presented on this very thread that show that it's possible that it might.

AndyGuil

The foreign buyers are known to hold on to property longer. Foreign people buying propery isn't an issue. They are often actually helping by funding new builds. Rents are going up hugely too and these properties are technically putting downward pressure on rents just because there are more of them. That shows how little effect there would be if more properties were to be sold. The population has been growing rapidly which has put extra pressure on. The recent figure for London new build purchases is 85-90% domestic. Prime central London has barely any residential property. Unfortunately a lot of figures are sensationalised somewhat by being selective and unrealistic. Foreign investment is no higher that it was a couple of decades ago.

ruggedtoast

mobfant wrote: »

I don't see how the bubble can possibly burst in London. I can see it stagnating, or deflating, but the pent up demand is such that I don't see how a fall of more than 10% could happen in London.

If action is taken by the Bank of England, and/or by Government that affects expectations of future rises along the lines of the 6% per annum for 5 years that some have suggested, this may have an effect on the "froth". People will be feel less pressured to stretch themselves or to call on parents, BTL'ers will need to focus on yields rather than capital gain which makes paying over-the-odds much less attractive, and those who would be happy to rent for a bit longer but feel like they have to get "on the ladder" now would take it easy for a year or two more.

However, given the shortage of supply that, with the best will in the world by Government (legislation, tax changes, etc) will take up to 5 years to address, people will want to live in London so rents will rise - making property more attractive for BTL'ers by increasing yields - and those want to buy now will do so but in a more central location/larger property than they otherwise might.

On top of that, a fall in prices would likely just lead to current homeowners holding on to their properties, so only those who need to sell will do so.

So, I think it's impossible for the bubble to burst, but it might deflate by 5-10%. The bubble in London hasn't truly burst for 20 years, so maybe it's not a bubble...

Thoughts?

It might be more fragile than you think. House prices in London are driven by a global assumption that London property is a one way bet, and so far it has been.

Those investors can pile out as fast as they piled in though. Its not just people fighting for homes.

That said I cant see London being cheap for the foreseeable future. The government is obviously willing to do whatever it takes to keep it unaffordable and to hell with the consequences for ordinary people.

CLAPTON

ruggedtoast wrote: »

That said I cant see London being cheap for the foreseeable future. The government is obviously willing to do whatever it takes to keep it unaffordable and to hell with the consequences for ordinary people.

unless houses are standing empty due to lack of buyers, then housing is affordable.

duchy

No-one *has* to live *in* London. It's a lifestyle choice.
Plenty of people who work in London choose to commute instead.

ruggedtoast

CLAPTON wrote: »

unless houses are standing empty due to lack of buyers, then housing is affordable.

Apparently flats are standing empty because people are buying them and then not living in them.

Disgraceful.

marleyboy

NO; - But then again, I would not rent or buy a house in London at any other time in the past or present.