Would you buy a house in London today?

Snakey

I bought in Zone 1 last month. My mortgage interest is less than my rent was (and this flat is bigger and nicer), and inflation reduces the real value of the debt each year. It doesn't matter how much it's worth unless I sell.

Sure, if prices fall I can beat myself up that *if* I had known this then I could have waited and got a better deal, but equally I could carry on renting and beat myself up if prices rise. Nobody knows what's going to happen. Half of us will be wrong, half of us will be right, but only hindsight can tell us which half is which.

In 2001, I was only about £15k off being able to buy a one-bed flat. Why didn't I do more to get my hands on that extra money by hook or by crook? Because everyone said London was overpriced and in a bubble and unsustainable and there would be a crash any time now. I look back at what I could have bought this flat for in 2001, and marvel at the memory of how unimaginably high those prices seemed at the time.

Is the rising market sustainable? Well, demand continues to increase faster than supply. Here's what I think on the subject of affordability:
a) people are living at home for longer and therefore able to save up more for a deposit;
b) when they buy, because they are older they are further up their career ladder and therefore earning more than a FTB of days gone by;
c) later retirement age means they have longer to pay off their mortgage; and
d) new pension rules give a psychological safety-net - "you can always use your pension pot to pay off your mortgage when you retire".
So I don't think it's axiomatic that sooner or later we will go back to the "historical long-term average" of a house being worth 3x average earnings. Things have changed. And I certainly think we're OK in the medium-term because many people who are priced out at the moment have ageing grandparents who own their own homes, and so will their children in a generation's time. There'll be chunks of unearned capital coming in to boost people's deposits for a good few years yet. By the time that all dries up, I'll have cashed in my gains and retired to the seaside with a bit of luck.