Is property in a bubble?

kilby_007

westernpromise wrote: »

I always enjoy the posts from people who claim that London's expensive so clearly nobody wants to live there.

"Go to London! I guarantee you'll either be mugged or not appreciated. Catch the train to London, stopping at Rejection, Disappointment, Backstabbing Central and Shattered Dreams Parkway."

Samsonite1

I could never live in Central London, but do love working and socialising there (from time to time). Absolutely love living in Greater London and having advantages of the City near by and the countryside equally near by.

Considering that the average salary in the Square Mile was over £100k in 2006 and given the huge number of people who work there, even discounting other sources of income, that is a lot higher than outside of the area. Bear in mind that these high earners will not live there but will spill outwards due to demand and lack of supply. I know there was a recession, I expect average salaries and bonuses are still pretty high. I work in the legal sector and this is the case, but not sure about banking these days...

adindas

kilby_007 wrote: »

"Go to London! I guarantee you'll either be mugged or not appreciated. Catch the train to London, stopping at Rejection, Disappointment, Backstabbing Central and Shattered Dreams Parkway."

Guarantee you'll either be mugged or not appreciated ??? Hmmmm I wonder wether you have a link to support your claim and personal experience living in London.

Now, reality check
What about the city boys, well known solicitors, Celebrity Chefs, Tube drivers, internationl tour operators just a few to name.

I fully believe they will disagree with you. How may of them making money more than they could do in London ??

I was living a few hundred miles from London a few years ago. Moving to the capital London I never regret my decision. Not to mention my house that I bought a few years ago it is now increasing in value of over 50%.

Not to mention I am now close to West End and other world class entertainment.

cells

CLAPTON wrote: »

when you compare what a couple of young people on decent incomes could afford 20-30 years ago (in London/SE) and compare like for like, young people wanting to live in a family sized home are massively worse off.
This is mainly the result of the increase in population and so of immigration.

Immigration brings no benefits except a larger range of restaurants and coffee bars (necesary I suppose as people want to escape from their single room in a shared flat) but loads of disadvantages.

we have a great opportunity to halt the flow by voting to leave the EU and regain control of our own immigration policy

No my dear one issue friend. London was artificially CHEAP 20-30 years ago and started to recover to a more normal level well before the mass migration of eastern Europeans from 2005 onward. Prices in inner London Hackney almost quadrupled between Jan1995-Jan2005. The fact that you base your argument on picking a terrible low point in London fools no one but yourself

Whatever the case you know full well that prices in London will NOT fall back to the levels seen 20-30 years ago if there is a brexit so you are offering a fake premise that voting out will enable the young poor to buy nice big terrace homes for two ha penny.

Even if prices drop 20% and go back to what they were a year ago the same people that cant afford a £1 million house in inner London eg the nurses and teachers and bus drivers wont be able to afford the now £800,000 house however maybe as many as a million londoners will see their mortgage interest payments rise as rates could rise and LTVs will go up pushing people into higher risk bank mortgages with higher prices something you dont mention in your 'if only we vote out the poor kids of london could buy that million pound family house in inner London'

lisyloo

kilby_007 wrote: »

"Go to London! I guarantee you'll either be mugged or not appreciated. Catch the train to London, stopping at Rejection, Disappointment, Backstabbing Central and Shattered Dreams Parkway."

Not my experience of all.
Lots of opportunity, optimism and enthusiasm.

A lot depend though on whether you're a glass half full of half empty person
There are good And bad points in London, do it probably won't suit Victor Mildrew types.

Tyrone_Black

lisyloo wrote: »

Not my experience of all.
Lots of opportunity, optimism and enthusiasm.

A lot depend though on whether you're a glass half full of half empty person
There are good And bad points in London, do it probably won't suit Victor Mildrew types.

It probably won't suit Alan Partridge types either...

AG47

So the conclusion is by these definitions of a bubble there is no doubt property is
a very big bubble

Mistermeaner

Arguably property is always in a bubble. This bubble can inflate and or deflate quickly and or slowly at any time.

Trouble is knowing what it is going to do and when and then also being able to do anything about it

A good strategy may be to buy a house you can afford to live in and pay the mortgage each month until you own said house

That way you don't need to worry about bubbles etc

Samsonite1

AG47 wrote: »

So the conclusion is by these definitions of a bubble there is no doubt property is
a very big bubble

Bubbles are just a relatively small period of time. In the long term, property is "safe as houses" when you talk about decades. Location will always have the biggest effect though. We were going to buy in Cardiff over 10 years ago. House prices there have not gone up that much since. We ended up scraping to get something near London (due to jobs) and made £200k profit in 3 years... The houses we were looking at in Cardiff were well under £200k.

kilby_007

Samsonite1 wrote: »

Bubbles are just a relatively small period of time. In the long term, property is "safe as houses" when you talk about decades. Location will always have the biggest effect though. We were going to buy in Cardiff over 10 years ago. House prices there have not gone up that much since. We ended up scraping to get something near London (due to jobs) and made £200k profit in 3 years... The houses we were looking at in Cardiff were well under £200k.

I disagree. We've seen a phenomenal widening of the inequality gap over the last 2 decades, evidence of which is in your post: Although I am not bitter that you've done well for yourself, it's clearly not fair that the simple act of buying and selling a house over 3 years has set you up for life, when people buying around the time you were selling have ended up in poverty. Various factors (mainly undersupply and the concept of property as an investment) have seen house prices rising at great magnitudes compared to incomes. To keep prices inflated and to encourage continued investment, there's been some drastic measures introduced by our governement to increase lending and the mirage of "affordability" over recent years. I wouldn't be so sure that this is a sustainable trend.

A LOT of people have based their mortgage affordability on the current interest rates. The banks include a small statement on the mortgage application along the lines of "make sure that you can keep up payments if your financial situation changes" but how many do you think take any notice of this? Now I'm not suggesting the following scenario is likely, but it's food for thought - in 1989-1990 the interest rate rose as high as 10%. With the inflated prices we've got now, on an average-ish £200,000 mortgage the increased interest payments on that level of debt is going to cost you approx £1100 per month extra. Multiply that by 2.5 if you're in London....