London property market bubble?

legoanakin

Hi All,

I've never posted on the forum before so apologies if this has already been discussed recently.

I am a first time buyer looking to buy a flat in London. One thing that has been worrying me for a while are reports that the London property market might be a bubble about to burst. I have read many articles on the subject with many arguments from 'experts', some saying it is going to happen, others saying no chance.

I appreciate that there are many different drivers and variables to consider but the only thing my research has led me to be sure of is that nobody has a clue. Can this really be the case?

Thoughts?

Thank you

thesaint

Oh dear, oh dear, oh dear.

ognum

legoanakin wrote: »

Hi All,

I've never posted on the forum before so apologies if this has already been discussed recently.

I am a first time buyer looking to buy a flat in London. One thing that has been worrying me for a while are reports that the London property market might be a bubble about to burst. I have read many articles on the subject with many arguments from 'experts', some saying it is going to happen, others saying no chance.

I appreciate that there are many different drivers and variables to consider but the only thing my research has led me to be sure of is that nobody has a clue. Can this really be the case?

Thoughts?

Thank you

Yes this is absolutely correct!

danslenoir

legoanakin wrote: »

Hi All,

I've never posted on the forum before so apologies if this has already been discussed recently.

I am a first time buyer looking to buy a flat in London. One thing that has been worrying me for a while are reports that the London property market might be a bubble about to burst. I have read many articles on the subject with many arguments from 'experts', some saying it is going to happen, others saying no chance.

I appreciate that there are many different drivers and variables to consider but the only thing my research has led me to be sure of is that nobody has a clue. Can this really be the case?

Thoughts?

Thank you

Yes, it is really the case that different people have different opinions on the likely trajectory of the London housing market given that it is, as you acknowledge, a highly complex one. No one has a crystal ball.

Does that answer your question?

Personally, if I was a first time buyer, I would not be looking at purchasing in London. Unless you are in a very fortunate economic situation, what you are going to get for your £ isn't likely to get you very far. Why not consider somewhere that has good transport links into London but isn't quite such a rip-off?

ognum

legoanakin wrote: »

Hi All,

I've never posted on the forum before so apologies if this has already been discussed recently.

I am a first time buyer looking to buy a flat in London. One thing that has been worrying me for a while are reports that the London property market might be a bubble about to burst. I have read many articles on the subject with many arguments from 'experts', some saying it is going to happen, others saying no chance.

I appreciate that there are many different drivers and variables to consider but the only thing my research has led me to be sure of is that nobody has a clue. Can this really be the case?

Thoughts?

Thank you

Yes this is absolutely correct!

ThePants999

Well, I'll qualify that advice somewhat: if you work in London, you need to make a very conscious decision between the quality of time you spend at home vs the amount of time you spend at home. You can get a lot more home for your money if you commute for an extra hour or two a day - frame the decision in those sorts of terms, and decide how valuable that extra time is vs how valuable a bigger or nicer home is. (Plus all the other factors beyond just "time".)

Running_Horse

Post this in the house price section and get ten pages covering just about every possible opinion. Or alternatively invest in a crystal ball.

economic

why do people think London is a bubble? because they didn't buy and now regret it? clearly London is expensive, but bubble? no I don't think so. there is still demand to buy even at these prices.

HouseBuyer77

there is still demand to buy even at these prices.

Indeed, however the demand is coming from several places. One place is people who actually want somewhere to live in london. This is the kind of demand that's unlikely to disappear overnight.

However there's also demand from BTL investors. The government have already made changes to made BTL less profitable, they may make more. This could lead to lower BTL demand and this could happen far more quickly.

You also have foreign money coming in. Again investors, potentially seeking to rent property, possibly just using it as a store of value. Many people don't like this, so perhaps the government will also start making property investment by foreigners harder/less appealing. One theory goes a lot of chinese money is coming in because the domestic options for investment in china are poor and the chinese like to store their money outside of the influence of the government. So a sudden change of china's economic fortunes could see demand from here drop suddenly, or perhaps the chinese government would do something to make investing in the london property market far harder for the chinese?

So perhaps there's a bubble, no-one can really say for sure. My advice to the OP would be to buy a place you'd be happy living in for good while. If the market collapses and you're in negative equity you could end up stuck there, so it better be somewhere you don't mind being stuck.

Try to buy somewhere with a wide appeal too. A reasonable 2-bed flat a bit further with some nice outside common spaces will appeal to more people than a broom-closet studio right in the centre. Again if the market falls it will be easier to sell/rent out.

Think about the effect on you if you see a 20/30/40% fall in property prices. If even a 20% fall spells seriously bad news for you perhaps you should rethink.

(For my own part in my current place I could deal with a 20% fall, though it wouldn't be great, 30%-40% I might start to get in trouble but I could get a lodger in if desperate).

ognum

HouseBuyer77 wrote: »

Indeed, however the demand is coming from several places. One place is people who actually want somewhere to live in london. This is the kind of demand that's unlikely to disappear overnight.

However there's also demand from BTL investors. The government have already made changes to made BTL less profitable, they may make more. This could lead to lower BTL demand and this could happen far more quickly.

You also have foreign money coming in. Again investors, potentially seeking to rent property, possibly just using it as a store of value. Many people don't like this, so perhaps the government will also start making property investment by foreigners harder/less appealing. One theory goes a lot of chinese money is coming in because the domestic options for investment in china are poor and the chinese like to store their money outside of the influence of the government. So a sudden change of china's economic fortunes could see demand from here drop suddenly, or perhaps the chinese government would do something to make investing in the london property market far harder for the chinese?

So perhaps there's a bubble, no-one can really say for sure. My advice to the OP would be to buy a place you'd be happy living in for good while. If the market collapses and you're in negative equity you could end up stuck there, so it better be somewhere you don't mind being stuck.

Try to buy somewhere with a wide appeal too. A reasonable 2-bed flat a bit further with some nice outside common spaces will appeal to more people than a broom-closet studio right in the centre. Again if the market falls it will be easier to sell/rent out.

Think about the effect on you if you see a 20/30/40% fall in property prices. If even a 20% fall spells seriously bad news for you perhaps you should rethink.

(For my own part in my current place I could deal with a 20% fall, though it wouldn't be great, 30%-40% I might start to get in trouble but I could get a lodger in if desperate).

I have been thinking about your reply and still cannot understand the last paragraph so perhaps you can help?

If you have already bought, even with a mortgage, the fall in house prices can really IMO only affect you when you come to sell, maybe putting you into negative equity.

Are you meaning that you would take a lodger to boost your savings/reduce you mortgage to the value of the property or do you mean something else?

Pixie5740

Yes it's the case that nobody has a clue. You buy somewhere to be a home. There will be peaks and troughs along the way but first and foremost it is your home.