What's the future of London with the ridiculous house prices?

chucknorris

brit1234 wrote: »

I am hoping so, maybe then with a good wage and big deposit I can buy. However Help to buy London and increased mortgage length terms (35-40 years) is a big threat.

In 2009/10 I could have bought a 3 bed flat in SW11 in the block where I already own 3 flats for £275k (but it did look a very tempting price), the current value is about £500k. I can see stagnation or minor dips, but I can't see falls of that magnitude happening.

mayonnaise

brit1234 wrote: »

I am hoping so, maybe then with a good wage and big deposit I can buy. However Help to buy London and increased mortgage length terms (35-40 years) is a big threat.

Help to Buy is not a threat, brit. Make it your friend and use of it.
With HTB London, your big deposit and a good wage, you can most definitely afford a place in your target area.

Good luck!

caronoel

brit1234 wrote: »

I am hoping so, maybe then with a good wage and big deposit I can buy. However Help to buy London and increased mortgage length terms (35-40 years) is a big threat.

Great to have you back brit - I was a bit worried about your recent silence.

Can you explain again why you didnt buy in Brentford or Isleworth when you could afford it in 2009?

Were you too busy waiting for that 50% house price crash? From memory, you were busily "investing" in gold and silver at that time. How did that work out?

:rotfl::rotfl:

Sadly for you, prices have almost doubled in that area while you have been praying for the sky to fall in

That's got to hurt

cells

CLAPTON wrote: »

which illustrates the effect of multiple occupancy on price per property and the unaffordablity of a modest family sized house in many parts of london for a 'normal' couple.

well yes renters earning 3-5 full time wages outbid (via their landlord) a couple or family with 1-2 full time wage earners.

That is a 'good' thing as its much more resource and infrastructure friendly for the 3-5 workers to be closer to the employment hubs and the 1-2 worker family to be further away.

cells

Generali wrote: »

I think the house prices vs GDP calculation only makes sense on a longer-term view. As a snapshot it's pretty meaningless.

Having said that in the very long term house prices tend to rise in line with GDP in the UK.

I was comparing the fact that both inside and outside of London it seems to hold true that regional house prices are ~3.5 x regional GDP

Of note is that the GDP function contains a term of imputed rent, related to house prices.

Yes but residential imputed and real actual paid rents are about 10% of London GDP so its not house rents that set GDP but it looks like GDP sets rents and prices

cells

brit1234 wrote: »

I am hoping so, maybe then with a good wage and big deposit I can buy. However Help to buy London and increased mortgage length terms (35-40 years) is a big threat.

Inner London is becoming the town of sharers living 3-5 full time workers per property. I think now and going forward its going to become harder and harder for families to own or rent there. This makes logical sense as its better to have 3-5 full time workers close to westminster/city/docklands than it is for 1-2 full time workers that would be a family

Outer London is expensive but for a couple of the median London wage still possible but that might or likely will also get increasingly difficult as the renters working 3-5 full time jobs per property displace the families

There are only 2 solutions.
1: build a lot more homes inside London especially zone 2
2: sell off the zone 2 council homes with have 0-2 full time workers and let them become rentals with 3-5 full time workers.

kabayiri

Couldn't they turn some of the bigger properties in London into nice multi-property dwellings (if not quite HMO)?

If you directly encourage it, it is a way of getting more efficient use of housing stock.

cells

kabayiri wrote: »

Couldn't they turn some of the bigger properties in London into nice multi-property dwellings (if not quite HMO)?

If you directly encourage it, it is a way of getting more efficient use of housing stock.

there arent that many large properties to split up and modern regs make the conversion quite costly.

the private rental sector in inner London is already pretty much as efficient as it can get. however the social sector is not.

Either the council homes in inner London should be sold off or the council and HA need to start renting out inner London properties on similar terms to private rentals. eg advertise their properties on rightmove and rent it out to the highest bidders on 1 year ASTs (which will mostly be to groups of friends/sharers) that way the council stock in inner London can also go to 3-5 workers per property rather than a more typical 0-1 workers per property.

westernpromise

cells wrote: »

Outer London is expensive but for a couple of the median London wage still possible but that might or likely will also get increasingly difficult as the renters working 3-5 full time jobs per property displace the families.

It’s an interesting point but I’m not sure that follows. Suburban London houses with garages and front and back gardens don’t lend themselves well to multiple occupancy. The type of place that does is a bit more inner-city, typically is a terrace with minimal garden space and one room per floor, so it’s easily subdividable and doesn’t have a lot of unrentable space that nonetheless needs to be maintained.

This must limit the scope for the workers to HMO suburban houses. If they are forced further out of London by price, you would I think see higher inflation in places like north Finchley than in say Mill Hill, which is close nearby, but doesn’t have much of the right sort of housing stock.

movilogo

There is a whole forum dedicated to the idea that the "right" price for houses is what they were 20 years ago.

But price of most things have fallen. It is only the house price that went up like crazy.

The alternatives to buying in London are renting in London, buying elsewhere and commuting, or renting elsewhere and commuting.

People are taking longer duration mortages. Effectively most of the buyers will pay mortgage for 50-60 years before they could own their houses. So, effectively these buyers are turning to perpetual renters. We are in the footstep of inter-generational mortgages.