Why are property prices so different in the north?

GreatApe

Mistermeaner wrote: »

increases in londons house prices have been good for those that were in the right place at the right time

However for a first time buyer in 2019 london is more expensive now than cheshire

The cost of ownership has to take into account changes in price of the asset

If the London home prices double over the next decade and Cheshire house prices crash 50% then which one was cheaper to own?

zagubov

It can be helpful to read articles like this one.

Sums up tons of what a lot of people here are worried about. The way London attracts 20-30 somethings to make a bit of dosh, but sees them having to do a runner in their 30s and 40s as they'll be living in shoeboxes with their kids. A lot of the moans in it apply to many big cities but not on the scale it applies to London.

Having to live in hovels isn't properly compensated by them being priced like they're mansions.

andrewf75

GreatApe wrote: »

The cost of ownership has to take into account changes in price of the asset

If the London home prices double over the next decade and Cheshire house prices crash 50% then which one was cheaper to own?

but that is with hindsight, you can't assume the same will happen in the next decade

westernpromise

andrewf75 wrote: »

but that is with hindsight, you can't assume the same will happen in the next decade

Well, obviously, But unless there's a cogent reason to think Cheshire will start to outperform London over the term of your mortgage, having failed to do so since 1960 or so, it would be exceedingly foolish to assume otherwise.

Any such factors in Cheshire's favour ought to be visible now, to be honest, because the kind of changes required would be large-scale demographic and infrastructural ones. Both take a long time to brew. If HS2 is going to suck all the jobs out of Canary Wharf and into Cheadle, it will need to start happening quite soon.

Canary Wharf is a good parallel actually. Its imminent redevelopment was talked about in The Long Good Friday in 1980. It didn't really catch fire till the late 90s.

jonnygee2

Sums up tons of what a lot of people here are worried about. The way London attracts 20-30 somethings to make a bit of dosh, but sees them having to do a runner in their 30s and 40s as they'll be living in shoeboxes with their kids. A lot of the moans in it apply to many big cities but not on the scale it applies to London.

On the flip side, increasingly in households both people want their individual, successful careers. It is very difficult to achieve this outside of London, it's often the case that at least one career will be stinted by a move to a smaller town. People stay in London because its where the jobs are, and that's unlikely to change.

Raising a family in London -. I think that's a culture thing. I was raised in London and I loved it, I would happily raise my kids here. But a lot of people living in London were raised in smaller towns and they struggle to see kids growing up in a city.

Crossrail will make a lot of areas commutable, central London is probably out of limits for most families but a four bed in Romford is attainable to a lot of working couples. As the number of commutable areas expands, options open up for people to stay in or around London.

And some of us were just born here, live here and aren't going to move.

So while it's true there are people leaving London there's also loads of reasons that people will stay too.

Thrugelmir

jonnygee2 wrote: »

On the flip side, increasingly in households both people want their individual, successful careers. It is very difficult to achieve this outside of London, it's often the case that at least one career will be stinted by a move to a smaller town.

My parents moved from London to Redhill, then Reigate many moons ago. Easy commute into central London. Plenty of opportunities to work elsewhere too.

GreatApe

Zero_Sum wrote: »

Massive flaw in your argument is that;
A) you're talking about what has happened historically and prices over last few years. Yes those who bought in the last 10 years have done well, but its not guarenteed. If Brexit causes a 10% reduction, then loss of value in London is going to be 6 or 7 times as much than the north.

But only about 3% of houses transact each year

What that means is, only 3% of buyers suffer the full force of the 10% crash.
The other 97% are still up

The price to wage ratio in London is pretty much at breaking point that even those on decent wages can only afford to rent a bedroom in a house share.

People have been saying this all my adult life it was the same story in 2007 when I first joined these types of discussion boards.

you're not comparing like for like. Take for example a couple who are both teachers. In the north they can easily buy a nice 3 or 4 bed detached house with drive & garage. In London they'd be looking at 2 bed ex council flat. Thats a pretty big drop in living standards.

Take two pairs of twins
One buys in 2009 up norf a 4 bedroom detached for £200k
The other buys in 2009 in London a 3 bedroom ex council for £200k
Both pay down their mortgage by £100k during the next 10 years

Ten years later the twin that bought in London sells the 3 bedroom ex council flat for £450k pocketing £350k and moves up norf as buys the house next door to his twin brother for £250k and puts the other £100k into a BTL up norf. The london twin is mortgage free and has a BTL earning him £500 a month. The one who stayed in the norf still has another £100k to pay off his mortgage....

who has the higher living standards through their life?

Not everything is about long term financial value. You're basically suggesting that people live in a bedsit for 20 year to get a bigger payout at the end.

Where have I suggested anything like that?

I have just highlighted a point that London has historically had the lowest housing costs in the country certainly since all the time I have been alive.

You dont need to buy the lowest cost housing, which has been in london, if you dont want to.
Just like a Ford is a low cost car I would not say dont buy a BMW if you want to pay more its your own free choice

At the end of the day, life is still for living. For me the idea of scrimping & scraping to get by in a small London flat just to end up with a large pension pot when I can a nice family home & live is just mental.

Great
But I will live in London it has the lowest housing costs and I am happy enough with my home
Feel free to do whatever you like

Yes mortgage interest is a cost, but have you considered that its far easier to get it paid off in the north? Can be mortgage free by early 40's then chuck money into investments that you otherwise would be paying towards mortgage. Whilst on London still paying interest on a mortgage at 65.

Despite trying to obscure the picture, the simple fact remains. Housing cost has to take into account the change in house values as well as interest paid. When you do that, you find that London has had the lowest housing costs in the country...at least for all the time i have been alive

My brother actually lives in London & pays 4 times as much in rent for a bedroom than I do on my mortgage for a 3 bed semi with garage, drive & ensuite bedroom

He should have bought rather than rented
Private Renting in London is indeed expensive
But private renters are a minority in London only about 25% rent privately, 75% dont
And even a smaller percentage rent privately long term...its something like 5% nationally and I would wager <10% in London

GreatApe

Zero_Sum wrote: »

I think some of the London lot have derailed my original point somewhat

London is a great city to visit as a tourist.
If you're young free & single, im sure you can have a wonderful experience.

However my original point was for raising a family? It just doesnt work.

Every now & then we have these best places to live surveys, due to housing costs, crime, pollution etc London nearly always comes out badly. I saw one recently that had London rock bottom. Regardless of how much money foreign investors (who dont live there) chuck at the place.

Whats even more bizarre is those claiming living a small flat whilst working then retiring in a nice house later on. Whilst financially that could work, what you're suggesting is raising kids in cramped conditions then when they move out, you then move to a bigger pad in the country.? How selfish?

Ive actually been to London a few times in the last few months & one of the things that struck me was the sheer amount of scruffy houses. And we're talking £500k+ houses here. There'll be the odd one in the street where they clearly have a bit of money, house done up, flash car in drive.
Then next door, garden unkempt, paint flaking off everywhere, dirty net blinds/curtains permamently closed.and its about 75% of the houses that are scruffy.
Even out in the affluent suburbs, theres still about 10% of houses that are like this.

You just dont get this up here. If you buy a house in a reasonable area (we're only talking £150k+) you can pretty much guarentee all the houses are well kept & the area looks smart..

I saw Corbyns house on TV tonight, and the garden was a mess.

London homes are not much smaller than the national average

So we do not live more dense than elsewhere

Private renters might...actually probably do...but the 75% or so that own or are in social have more or less the same amount of space

In fact I would wager Londoners have the same or slightly more space. So many London homes have been extended or had a loft conversion done.

Plus beyond a certain point more space typically just means more junk. I have a room which is just an ironing room where the ironing board sits open all the time...do I need that, is my life so much better for not having to open and close an iron once a week...no

GreatApe

westernpromise wrote: »

Well, obviously, But unless there's a cogent reason to think Cheshire will start to outperform London over the term of your mortgage, having failed to do so since 1960 or so, it would be exceedingly foolish to assume otherwise.

Any such factors in Cheshire's favour ought to be visible now, to be honest, because the kind of changes required would be large-scale demographic and infrastructural ones. Both take a long time to brew. If HS2 is going to suck all the jobs out of Canary Wharf and into Cheadle, it will need to start happening quite soon.

Canary Wharf is a good parallel actually. Its imminent redevelopment was talked about in The Long Good Friday in 1980. It didn't really catch fire till the late 90s.

There is a risk to London in the form of AI and automation of services.
At some stage all those London service sector jobs will be done with 1/5th as many people + AI software. This will be a great leap in productivity so the nation will be richer, Londoners will be richer but property prices could crash (by which I mean the gap will narrow between London and rUK)

Taken to the extreme imagine a 2050 world where almost no humans work and all our needs are met by AI then there is no real advantage to being in London rather than Birmingham

Going further out, at some point humanity will become digital in which case all physical housing is going to be worthless.......

GreatApe

zagubov wrote: »

You've hit a nail on its head. London property is pricey but it's not valuable or desirable except as an investment. As accommodation it's pretty underwhelming.

The vast majority of it is useless for families with more than two kids. A lot of it' consists of small houses chopped into tiny flats instead of being purpose-built.

The education and health services are overstretched and heavily reliant on excellent staff from other countries.

When people from the rest of Britain visit they even find the hotel rooms cramped.

We're okay-ish because we bought at the right time in the price zigzag.

I know plenty of people with similar incomes outside London and they're living in much better conditions and with much better quality of life.

I would never recommend this as the best place in Britain to start and bring up a family (the rest of the UK is awash with places good for that).

It's a great place to visit and to come and work for a while, and go out a lot because you haven't a lot to come home to.


A lot of entertainment venues and even just local pubs have been re-purposed.

London homes are not smaller than the national average

Why do you think they are?

You are making a mistake, which is thinking X pounds rents or buys a smaller place in London.
But that is not the same as saying Londoners live in small homes. We dont!

Average London homes are more or less the same size as rUK
What you are failing to see or understand is that....Londoners can afford to pay more for housing so while yes an individual might be able to afford less space in London, as a whole...Londoners do not have less housing space