London's luxury property market is crumbling - Terrible news for affordable housing

Generali

michaels wrote: »

No wonder they need all those fences what with it being in the borders....

<shhhh>I suspect you need a shorter border the further you go from Tottenham</shhhh>

michaels

Tottenham are on the border of Leicester I believe, unfortunately just a little to the South....

Generali

michaels wrote: »

Tottenham are on the border of Leicester I believe, unfortunately just a little to the South....

4 weeks to go yet old friend.

cells

Generali wrote: »

This is a luxury property apparently:

http://www.rightmove.co.uk/new-homes-for-sale/property-37851669.html/svr/2714;jsessionid=432A9EB50C869BC1DA25C3D48FB4853B?premiumA=true

Eight hundred and fifty thousand squids for a grey house with tiny windows. At least you can buy drugs conveniently, that's a plus. You'd need the drugs to get you out the door in the morning.

its twice the size of a normal uk house.

wotsthat

Generali wrote: »

This is a luxury property apparently:

http://www.rightmove.co.uk/new-homes-for-sale/property-37851669.html/svr/2714;jsessionid=432A9EB50C869BC1DA25C3D48FB4853B?premiumA=true

Eight hundred and fifty thousand squids for a grey house with tiny windows. At least you can buy drugs conveniently, that's a plus. You'd need the drugs to get you out the door in the morning.

I don't know how people justify it to themselves.

I looked at this place in the grim South-West

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=37636139&sale=52372679&country=england

Went for £650k.

I'd have the family in there, work from home a day a week and trawl the web for Travelodge tennertastics for the rest of the week.

cells

wotsthat wrote: »

I don't know how people justify it to themselves.

It is not about justifying a price and paying it, its simply what people are paying. you can look at why/how they are doing it


The biggest factor is that London is a lot richer than it was. Its GVA growth has outpaced the rest of the country by quite a margin. Going forward the ONS estimates London will pull further ahead of rUK.

The second biggest factor is that homes in London especially the expensive ones tend to be larger and better spec than other regions. The one Generali posted is about twice the size of a typical house. Not many homes in the north or midlands have £1 million spent on extending them up & down and have £500k worth of internal improvements.


Another factor in London is the huge amount of 'income' via gifts and inheritances. Only looking at earnt income misses a huge chunk of the buyers in London.

mwpt

Also pertinent here is the affordability topic. Interest rates are low so monthly affordability may seem low. I posted a scenario in another thread where buyers who bought a £240k flat way back when, have seen the asset price inflate and repayments go down, can easily be sitting on close to £500k equity for deposit on the next house. Their incomes can be sitting in the 60th or 70th London percentile but they're still able to trade up to a house approaching £1m and not be hit too much by the monthly mortgage payments. On the other hand, even someone on a top 1% salary and chunk of deposit will be unlikely to afford it. It's all about the previous transfer of future earnings into the present.

As mentioning though, low interest rates makes the debt seem serviceable, but it's far harder over the long term for people now that it was on higher rates and lower house prices (though some here like to grumble about that).


Own up, which one of you is catdog1121?
http://www.housepricecrash.co.uk/forum/index.php?/topic/209356-affordability-price-to-earnings-through-the-roof/?p=1102925527

I can't join in with the debate over there but needless to say, most of you know my position on interest rates vs affordability. Hamish and R K could be best pals judging by their positions on debt. I think Hamish is ok despite our disagreements, but R K seems like a douche.

wotsthat

cells wrote: »

It is not about justifying a price and paying it, its simply what people are paying. you can look at why/how they are doing it


The biggest factor is that London is a lot richer than it was. Its GVA growth has outpaced the rest of the country by quite a margin. Going forward the ONS estimates London will pull further ahead of rUK.

The second biggest factor is that homes in London especially the expensive ones tend to be larger and better spec than other regions. The one Generali posted is about twice the size of a typical house. Not many homes in the north or midlands have £1 million spent on extending them up & down and have £500k worth of internal improvements.


Another factor in London is the huge amount of 'income' via gifts and inheritances. Only looking at earnt income misses a huge chunk of the buyers in London.

It could just be that London prices are ripe for a crash.

Not predicting it mind but I suspect you'd use your same logic if London prices were double. Also don't forget London isn't a thing - it's a place and not too many miles away from places where prices are dramatically cheaper.

Even as close as Luton this is available for £800k.

http://www.rightmove.co.uk/property-for-sale/property-57660179.html

There seems to be a steep gradient in price when moving out of London. The steepness of that graph would worry me as a London investor.

Get up to Leicester and for £850k you get this..

http://www.rightmove.co.uk/property-for-sale/property-41277213.html

It's actually a struggle to spend that much money on a house. A season ticket would cost £9k and it's 72 minutes Leicester to St. Pancras.

I agree there are obviously some fundamentals to explain London prices but there's more than a sniff of the London bug coming into it i.e. London or nothing.

martinsurrey

wotsthat wrote: »

Even as close as Luton...

for most of the London market that may as well be on the moon...

cells

wotsthat wrote: »

It could just be that London prices are ripe for a crash.

Not predicting it mind but I suspect you'd use your same logic if London prices were double. Also don't forget London isn't a thing - it's a place and not too many miles away from places where prices are dramatically cheaper.

Even as close as Luton this is available for £800k.

http://www.rightmove.co.uk/property-for-sale/property-57660179.html

That house you posted is 50 sqm bigger than the one Generali posted and that might just be a little exaggeration by the agents while the new build is probably going off blue prints

So a 155 sqm house at £850k vs a 210 sqm house at £800k

Or £5.5k v £3.8k on a sqm basis


The London home is thus 45% more expensive.
For that you get
1: Cheaper transport costs
2: A new build (this one is important)
3: Lower council tax
4: Lower Heating bills (possibly less than half)
5: 10 year guarantee on defects

Also in my experience going from a typical 75sqm house to a 150sqm house is a good boost in quality of life. Going from a 150sqm to a 210sqm is not all that big a difference you tend to just store junk in the excess rooms or have 'guest rooms' that might be used one week a year.



And no, the same logic would not apply if London was twice the price while the SE was the same price. The differential in London v SE prices is a gradient which pushes people out of London. London can not double while the SE stays put as a couple of million Londoners in that situation would vacate and buy in the SE