Buying Property in London

Henry9

Hi all, would any of the long term Londoners ever consider buying a home here rather than renting?
By any measure a lot of property in London is insanely expensive, but considering the high rents isn't it hard not to tot up in your head the 'dead money' you'll pay over 5-10 years?

The problem obviously is a crash and then you're fecked. That and knowing the place well enough to know where to buy. I lived in Dublin long enough that I know where I would and wouldn't live.

Has anyone looked into the 'Help to Buy' scheme?

Lump

I bought a flat 2 years ago. Best thing I've ever done. Rent is wasted money. If you can find an affordable area then it's a no brainer. I had make a decision to move further out of London, or buy in a less desirable area. I went with buying a 2 bed (large-ish) flat in W12 (White City) It was affordable and now with TVC being redeveloped and westfield expanding I am onto a winner I hope.

I had to have a healthy deposit, but I bought on my own. I suggest everyone do it if they can afford it!

Henry9

Any idea of a map of areas and 'affordability'? I remember seeing one for rents that wasn't far wrong.
I would be buying on my own too, paying the monthly rent is breaking my heart.

Lump

No clue really, I went to an area I first lived when I moved to London. It's a council Estate, still a number of council flats, but a fair number are privately owned too.

Council flats are good as the leases tend to be long and the yearly fees are alot better than private management companies. However, if they decide to replace the lifts I have to contribute to that which is a pain as I live on the ground floor.

It's been good so far, my mortgage is about £100 more than my rent was! I have been letting out my spare room since I bought the place, so have actually made money on it over the past 2 years!

What area's are you thinking of buying?

Henry9

Lump wrote: »

It's been good so far, my mortgage is about £100 more than my rent was!

That's what's influencing my thinking, I wouldn't mind paying another hundred or two if it was on a mortgage rather than to a landlord.

At the moment I'm focusing on SW. It's a huge place and that's the only place I know so far. I could move further out once it's near the train line, but I don't see the point in moving to suburbia.

There are possibilities on the North side, Kentish town might be do able.

Actually found this very interesting, I can't vouch for it's accuracy.

Putney looks surprisingly 'reasonable'.

http://www.londonpropertywatch.co.uk/avg_prices.html

hfallada

There is talk of a bubble in London. Since so many people are pouring money into uk property as its in GBP and not the "dodgy" EUR. Remember although mortgages are cheaper now. Can you handle normal interest rates ie base rate of 5% with Bank of England meaning your interest rate is about 7-9%

afatbollix

Personally I think London prices are only going higher. With this help to buy schemes & a million extra people moving to London in the next couple of years it only means prices are going to go up.

Personally I think house prices are guaranteed to increase for the next 5 to 7 years.


Im looking at the help to buy scheme low deposit and I could have the mortgage paid off in 10 years and then have the cash for a big deposit on a family house.

theteal

We're toying with the idea of buying in and around Romford at the moment - I know it's not "London" London but 25mins from Liverpool street is close enough for me. The average 3 bed house is £220k-£260k and we're paying £1k per month in rent for a 2 bed house as it is so it certainly appears that a purchase would be more cost effective. Prices are definitely rising at the minute and this cross rail thing is going to push that further.

jonnyfingers

I'd love to buy but the houses where we want to live are just too expensive. I also have a horrible feeling that by the time I save the massive deposit necessary to buy an expensive house the London property bubble will burst. But that's the risk you have to take.

Regardless we can't do anything for a couple of years as we're getting married in a year and all our savings are going towards that at the moment with little left over to put towards a deposit. But assuming house prices stay pretty static it's a good idea to buy if you can.

BrokenArrows

Its a tough one.

I know I want to buy in the next year or two but I don't know if im still going to want to stay in the UK for enough time to justify getting a mortgage here.

I see better value in buying back in Ireland.

As for a bubble in London. Im not sure that London would ever crash. It might slowly decrease but that's not going to happen over night.

The crashes in Ireland were simply caused by supply exceeding demand. That's not happening in London.

djpbarry

BrokenArrows wrote: »

The crashes in Ireland were simply caused by supply exceeding demand. That's not happening in London.

Not exactly. Everyone in Ireland thought they could get rich selling property to each other. Property investors in London are thinking exactly the same thing. The arse has to fall out of it sooner or later.

The average house price in London is way, way more than the average Londoner can afford and yet prices are still increasing - if that's not an anomalous bubble...

Fysh

jonnyfingers wrote: »

I'd love to buy but the houses where we want to live are just too expensive. I also have a horrible feeling that by the time I save the massive deposit necessary to buy an expensive house the London property bubble will burst. But that's the risk you have to take.

Regardless we can't do anything for a couple of years as we're getting married in a year and all our savings are going towards that at the moment with little left over to put towards a deposit. But assuming house prices stay pretty static it's a good idea to buy if you can.

Obviously it's your own business, but would it not make more sense to focus the majority of your savings towards purchasing a valuable long-term asset rather than propping up the wedding industry?

(I realise that just by typing this I may have invoked a Category 4 Bridezilla attack, in which case I shall go and cower behind the sofa and grovel for forgiveness...)

djpbarry wrote: »

Not exactly. Everyone in Ireland thought they could get rich selling property to each other. Property investors in London are thinking exactly the same thing. The arse has to fall out of it sooner or later.

The average house price in London is way, way more than the average Londoner can afford and yet prices are still increasing - if that's not an anomalous bubble...

Part of the problem London has right now is that it's a popular foreign investment site. With the likes of the Chinese government clamping down on real estate investment, and increasing numbers of Russian millionaires wishing to invest their money outside of Russia, there's demand for property amongst exceptionally wealthy folks that is at serious risk of driving out the people who live and work here. That won't last forever (eventually even the Tories won't be able to justify the usual excuse of "Well go live somewhere else you can afford then", because it's already the case that you want to be earning at least £10kpa more than the national average to live in London and that's without any dependents or childcare costs). At which point, investment properties may turn out to be less profitable than previously.

Personally, I wouldn't dream of buying in London, for 2 reasons:
1) There's not a hope in hell I could afford what I'd actually like to live in within the M25 - I'd like space, 3 bedrooms, a garden and good local facilities, which in my area would mean a horrific amount of money for what I'd get, and
2) I have no idea whether I even want to be in the UK in 10 years time, never mind London. So a mortgage would be a commitment I can't really guarantee I'll be happy with.

As ever, I would point out that if you know you want to stay here long-term, a mortgage makes more sense than rent (if you've got a deposit and can get a reasonable rate), but for those of us with itchy feet and a tendency to wander, one of the things we get from paying rent is the ability to say "I'm leaving" at the end of the tenancy and not have the hassle of selling on to someone else. (Not to mention the freedom of knowing that issues with eg plumbing or infrastructure are paid by the landlord not the tenant...)

jonnyfingers

Fysh wrote: »

Obviously it's your own business, but would it not make more sense to focus the majority of your savings towards purchasing a valuable long-term asset rather than propping up the wedding industry?

(I realise that just by typing this I may have invoked a Category 4 Bridezilla attack, in which case I shall go and cower behind the sofa and grovel for forgiveness...)

Oh believe me, it's crossed my mind. But we're not going too crazy and everything is already planned really, so we just need to pay for it!

83ste

Interesting reading on this subject today: http://www.theguardian.com/books/2013/aug/18/default-line-extract-faisal-islam-housing

Henry9

djpbarry wrote: »

Not exactly. Everyone in Ireland thought they could get rich selling property to each other. Property investors in London are thinking exactly the same thing. The arse has to fall out of it sooner or later.

The average house price in London is way, way more than the average Londoner can afford and yet prices are still increasing - if that's not an anomalous bubble...

Maybe it will, but there's a difference in buying off the plans in Leitrim and buying real estate in zone 2. I can't say it won't crash, but I think a 'quality' area will hold up better. There won't be any ghost estates let's put it that way.

The story seems to be foreign investors pushing everything up alright. I don't know how anyone on a lower income can afford to work in London, but they seem to be everywhere I go.

The help to buy scheme seems to involve a deposit of 5%, an interest free loan from the Gov of 20% and you borrow 75%.
Worthy of Charlie McCreevy I think.
Plus the media are really starting to pump up the hype around the market, a bad sign I think.

But given the scheme isn't ending anytime soon, and rates are probably staying where they are for another year or two, there's more left in this market before it stalls I think. Maybe enough to have a sufficient cushion when it does come down again.

All speculation on my part though, I wouldn't be an avid watcher of the London property market.

Henry9

serrity wrote: »

Interesting reading on this subject today: http://www.theguardian.com/books/2013/aug/18/default-line-extract-faisal-islam-housing

She borrowed 125% of the value. No sympathy for her.

djpbarry

Henry9 wrote: »

Maybe it will, but there's a difference in buying off the plans in Leitrim and buying real estate in zone 2. I can't say it won't crash, but I think a 'quality' area will hold up better. There won't be any ghost estates let's put it that way.

There are areas of prime real estate in the heart of Dublin left idle because the developers (or builders, as they used to be called) who own them want to hold out until the price recovers before selling. They're not ghost estates, but they are ghost plots. There's no reason why the same thing can't happen in London.

Nika Bolokov

Recently looked at a place to rent, 2 bed a few minutes walk from Fulham Broadway tube. SW6, nice flat, nice area.

Rent is about 18K per year. A flat in the block 'in need of updating' sold recently for 575K. That gives a yield of about 3% not taking in to account expenses. 18K - 20K a year is prob what it costs to rent a two bed around here and most are selling north of 550K.

The average interest rate over the past 100 years was about 4%. So not the best investment from a historical perspective.

Taking the above example imagine prices in London go up 15%, which could happen over the next 18 months, that flat now costs about 660K. To get a four percent yield the rent would have to go to 26K making it a sustainable long term investment, nearly a 50% rise on what it is.

If you can not put the rent up 50% your yield is even worse. The only reason you would buy it is if you feel that the price would go higher again making the yield worse again.

Interest rates will rise, investors will not tolerate 2% yields on property then and the rent rises needed on such highly priced properties to make them pay are beyond the capacity of the market. Salaries will not go that high that quick, if rents dont rise as quick as prices, renting becomes way cheaper than buying and the arse falls out of things.

If you are going to buy maybe run the place through that scenario. Put the price up 15%, check out the rental yield at todays rent and then how much it would have to go up to give a 4% yield. If the numbers look mad think seriously about buying as when interest rates move up, which the bank of England will start to do when unemployment goes to 7% as they said they will, things could get messy as investors pull out.

Marcusm

Hyper prime, prime and near prime London purchase prices are in a bubble; rents have not risen nearly as fast. It won't be the same as Ireland but there is trouble ahead - I speak as one over invested in prime/near prime property. The capital values are not supported by rentals nor economic fundamentals. The impact fo far East investors and loose lending criteria are principal causation factors.

Henry9

Nika Bolokov wrote: »

Recently looked at a place to rent, 2 bed a few minutes walk from Fulham Broadway tube. SW6, nice flat, nice area.

Rent is about 18K per year. A flat in the block 'in need of updating' sold recently for 575K. That gives a yield of about 3% not taking in to account expenses. 18K - 20K a year is prob what it costs to rent a two bed around here and most are selling north of 550K.

The average interest rate over the past 100 years was about 4%. So not the best investment from a historical perspective.

Taking the above example imagine prices in London go up 15%, which could happen over the next 18 months, that flat now costs about 660K. To get a four percent yield the rent would have to go to 26K making it a sustainable long term investment, nearly a 50% rise on what it is.

If you can not put the rent up 50% your yield is even worse. The only reason you would buy it is if you feel that the price would go higher again making the yield worse again.

Interest rates will rise, investors will not tolerate 2% yields on property then and the rent rises needed on such highly priced properties to make them pay are beyond the capacity of the market. Salaries will not go that high that quick, if rents dont rise as quick as prices, renting becomes way cheaper than buying and the arse falls out of things.

If you are going to buy maybe run the place through that scenario. Put the price up 15%, check out the rental yield at todays rent and then how much it would have to go up to give a 4% yield. If the numbers look mad think seriously about buying as when interest rates move up, which the bank of England will start to do when unemployment goes to 7% as they said they will, things could get messy as investors pull out.

I think the problem with your analysis is that it's focused on rental yield.
The more important element to the current investors is price growth (IMO).

Marcusm wrote:

Hyper prime, prime and near prime London purchase prices are in a bubble; rents have not risen nearly as fast. It won't be the same as Ireland but there is trouble ahead - I speak as one over invested in prime/near prime property. The capital values are not supported by rentals nor economic fundamentals. The impact fo far East investors and loose lending criteria are principal causation factors.

I'd agree with that, but what is the definition of 'prime' in terms of price?

I'm tempted to think that if that part of the market bursts, it's separate from the rest. But didn't people in Ireland think that too?

Nika Bolokov

Henry9 wrote: »

I think the problem with your analysis is that it's focused on rental yield.
The more important element to the current investors is price growth (IMO).

Which is the issue as this is the classic sign of a problem. Buying a lump of concrete in the hope someone else will buy it for more in the hope someone else will pay more again for no particular reason as the rents are falling.

Henry9

Mortgage approvals in July were highest since Mar 08.

First time buyers accounted for 56% of loans in London to June this year.
They borrowed an average of 3.67 times their income.

It seems a lot of people are gearing up to buy homes again, but it's hard to interpret data with so little granularity.

Lump

Renting is wasted money and there are areas to guy in london that aren't over priced and expensive - Fulham Broadway is not one of them.

enda1

Lump wrote: »

Renting is wasted money and there are areas to guy in london that aren't over priced and expensive - Fulham Broadway is not one of them.

Mortgage interest payments are wasted money
Maintenance is wasted money
Solicitor Fees are wasted money
Mortgage fees are wasted money
Stamp duty is wasted money
The differential between mortgage payment and rent payment lost interest on future savings is wasted money
The loss of the interest gained on the deposit sum you've put forward is wasted money
Buying depreciable furniture is wasted money
Being stuck in a location tied to the whims of the property market while a better life awaits you elsewhere is far more than just wasted money

Put that argument to bed, it's nonsense.

Jack B. Badd

Lump wrote: »

Renting is wasted money and there are areas to guy in london that aren't over priced and expensive - Fulham Broadway is not one of them.

enda1 wrote: »

Mortgage interest payments are wasted money
Maintenance is wasted money
Solicitor Fees are wasted money
Mortgage fees are wasted money
Stamp duty is wasted money
The differential between mortgage payment and rent payment lost interest on future savings is wasted money
The loss of the interest gained on the deposit sum you've put forward is wasted money
Buying depreciable furniture is wasted money
Being stuck in a location tied to the whims of the property market while a better life awaits you elsewhere is far more than just wasted money

Put that argument to bed, it's nonsense.

Right, you've both had your say. The "wasted money" conversation is going no further than this. Thank you.

Terrontress

My wife and I bought in 2011. We paid 250k (stamp duty threshold) for a 3 bed garden flat in SW2 / Zone 3.

We took a 97% mortgage which ended up £75 less than the rent we were paying.

We are slowly modernising but a well finished 2 bed without garden on our street went for £350k earlier this year and a 2 bed finished to a high standard with a good garden is currently up for £475k.

So it appears that property prices have flown up. This really frightens me and for that reason I'd advise anyone who isn't in it for the very long term to hold fire.

It looks like a repeat of Dublin to me.

djpbarry

Property prices in London have risen an astonishing 9.7% over the past year, but apparently we're "a thousand miles away from a housing bubble"?

A range of other statistics, including mortgage approvals and transactions, suggest that the UK is still a long way from another house price boom.

The most recent figures from the Land Registry, which records house sales in England and Wales, indicate the market is well below the peak reached in November 2007.

Howard Archer, chief UK economist at IHS Global Insight, said: "We are currently some way off any new housing bubble developing, with activity still relatively limited compared to pre-crisis levels."

...

"There is a mounting danger that house prices could really take off further out, especially as a shortage of new properties for sale could be a significant factor in some areas," said Howard Archer.

Nevertheless, Danny Alexander, the chief secretary to the Treasury, said at the weekend that the country is "a thousand miles away from a housing bubble."

http://www.bbc.co.uk/news/business-24124904

Some of this rhetoric sounds awfully familiar. The reluctance among the relevant authorities to acknowledge that these price increases in London are clearly anomalous is rather disturbing.

Nika Bolokov

£745,000 now for a new one bed apartment in Fulham in between a cement yard and a warehouse overlooking a Sainsburys. Granted it will be nice once the rest of the surrounding area is demolished..............:eek::eek::eek::eek:

Mynamehere

Hi all.

Only recently moved over and thinking of maybe buying something in about 1 and a half or 2 years time.

Problem is iv no credit rating/ score. I have no need for a loan for anything at the moment but was thinking of getting one for the sake of getting a credit score.

Does anyone on here know the best way of building up a credit rating for a small morgage. Would getting a small loan and paying it back help at all. Any advice would be appreciated. Thanks.

theteal

Mynamehere wrote: »

Hi all.

Only recently moved over and thinking of maybe buying something in about 1 and a half or 2 years time.

Problem is iv no credit rating/ score. I have no need for a loan for anything at the moment but was thinking of getting one for the sake of getting a credit score.

Does anyone on here know the best way of building up a credit rating for a small morgage. Would getting a small loan and paying it back help at all. Any advice would be appreciated. Thanks.

there's a few bits that add up to help your credit rating e.g. sign on the voting register, get a credit card, utility bills, don't miss dds or ever use an overdraft etc.

do a free experian credit check and it'll give you an idea

djpbarry

djpbarry wrote: »

Property prices in London have risen an astonishing 9.7% over the past year, but apparently we're "a thousand miles away from a housing bubble"?

http://www.bbc.co.uk/news/business-24124904

Some of this rhetoric sounds awfully familiar. The reluctance among the relevant authorities to acknowledge that these price increases in London are clearly anomalous is rather disturbing.

Sorry to revive this thread but, with regard to the above, it's nice to finally hear some dissenting voices:

The business secretary, Vince Cable, on Monday evening infuriated his Conservative coalition colleagues when he chose the eve of the publication of the latest GDP figures to warn that Britain was experiencing the wrong sort of economic recovery and said his party was not wedded to the pace and scale of deficit cuts after 2015 set out by George Osborne.

...

Cable said a third of mortgage debt was held by households who had borrowed more than four times their income. "The US subprime mortgage crisis and its British equivalent were built on the shaky foundations of encouraging mass home purchase in inflating markets and we know where that led. It must not happen again."

http://www.theguardian.com/business/2014/jan/27/vince-cable-george-osborne-economic-recovery

Playboy

djpbarry wrote: »

Sorry to revive this thread but, with regard to the above, it's nice to finally hear some dissenting voices:

http://www.theguardian.com/business/2014/jan/27/vince-cable-george-osborne-economic-recovery

Housing in London is in a shocking state and its good to hear someone speak up. Residential Property should be affordable and linked to a multiple of the average wage. People who work and live in London should be protected from property speculators and investors and supply should be increased to match demand from first time buyers.

People who work in London are been driven out of the city and have to put up with long commutes and an expensive, fragile and overcrowded rail infrastructure or are forced to live in sub standard accommodation in London. Why? It is absolutely a housing bubble in London and the South East, its a bubble that might not end anytime soon but its still a bubble when property prices are complete out of sync with average earnings.

Planning restrictions need to be eased so supply can be increased. Stamp duty should be removed entirely for first time buyers. Further financial disincentives should be put in place similar to the oligarch tax to make property speculation in London less attractive. These are only some of the measures that need to be put in place. Doubt it will happen anytime soon though as the government don't want to piss off home owners by devaluing their asset especially when the majority of the government have multiple properties themselves. The working youth living in the south east are really being exploited by the current situation. Help to buy only helps one group of people and it isn't first time buyers.

djpbarry

Ernst and Young warn of a bubble forming in London:

The London housing market is exhibiting "bubble-like" conditions, economic forecaster Ernst and Young has warned.

It says the average price in the capital is expected to reach around £600,000 by 2018, 3.3 times the price in the north-east of England.

Interesting idea proposed by a think-tank called Civitas:

The think tank says that non-residents of the UK should only be allowed to purchase a property in London if that investment will add to the number of homes, under a system similar to that in force in Australia.

There, non-residents are not allowed to buy an existing home but may be allowed to buy an unoccupied new dwelling, so long as they can satisfy the authorities that the housing stock has increased.

http://www.bbc.co.uk/news/business-26006214

Playboy

Seen a similar report to the one above in the guardian. Well worth a read.

http://www.theguardian.com/business/2014/feb/01/rich-overseas-investors-uk-eu-housing-market

Radical plans to stop rich overseas residents who live outside the EU buying British houses – as well as tight restrictions on them acquiring "newbuild" properties as investments – will be published in a report by a leading rightwing thinktank on Monday.

Free-market organisation Civitas castigates government ministers for allowing wealthy foreign investors to stoke a property boom that it says is driving up prices and locking millions of UK citizens out of the housing market.

The plans would prevent the likes of Roman Abramovich, owner of Chelsea football club, or other Russian oligarchs from adding to their multimillion-pound UK portfolios. They also aim to stem a flood of investment from countries such as China, Malaysia and Singapore.

Concerned that many middle and lower earners are being forced to pay high rents in London because they can't afford to buy, Civitas calls on ministers to adopt a scheme similar to one operating in Australia, which ensures that no sale can take place to overseas buyers unless they can show that their investment will add to existing housing stock.

Such a system would mean that no existing home could be sold to a buyer from outside the EU, and that such buyers could acquire newbuild homes only if their investment led to one or more additional properties being built.

The report, called Finding Shelter, cites statistics showing that 85% of prime London property purchases in 2012 were made with overseas money. Estate agent Savills found that last year £7bn of international money was spent on "high-end" London homes, with just 20% of that spent by UK citizens. Two-thirds of homes bought by people from overseas were not purchased for owner-occupation but as investments.

Civitas says the problem is not confined to the top end of the market and that overseas buyers are also acquiring less expensive newbuild homes. It says that over the past two years only 27% of new homes in central London went to UK buyers, while more than half were sold to residents of Singapore, Hong Kong, China, Malaysia and Russia.

"The UK property market is being used as an investment vehicle by the global super-rich – and increasingly the simply well-to-do," the report says. "The inflationary impact of this extra cash is good news for property owners – until they want to trade up the housing ladder.

"It is good news for estate agents on commission, who report with glee every pulse and surge in the market. But it is not good for those already being priced out at the bottom."

Overseas investment, it adds, is also "distorting housebuilding priorities, with developers disproportionately attracted to high-value developments while ignoring the undersupply at lower levels of the market."

Oligarchs including Abramovich and former Yukos Oil vice-president Konstantin Kagalovsky have bought London properties, with Belgravia, Knightsbridge, Kensington and Chelsea their favourite hunting grounds.

Under Australia's scheme, all foreign non-residents and holders of short-term visas have to apply to the Foreign Investment Review Board if they want to buy property. Its rules state that they can do so only if their investment leads to an increase in available dwellings.

Civitas says that if a similar scheme were adopted here, people from outside the EU would be able buy a newbuild property only if they had invested in a building scheme.

In last year's autumn statement the chancellor, George Osborne, announced that he was closing a loophole that had allowed foreign investors to make huge profits on sales of UK homes by avoiding any capital gains tax. Civitas says that move, while a step forward, is unlikely to deter them, because the booming British market remains so attractive.

Labour recently announced a series of measures to boost housebuilding and deter foreign investment in London, including changing the rules so that newbuild homes have to be marketed to Londoners first, rather than sold off-plan to investors around the world. It also plans to double council tax for homes left empty and will end another loophole that allows overseas owners to cut their tax bills by claiming their properties are "second homes" and furnishing them with minimal items such a single table and chair.

Sadiq Khan, the shadow London minister, said: "London is in the middle of a severe housing crisis, yet there are around 50,000 empty homes across the city. It's complete madness. We must stop housing that's built as family homes being used instead as a piggy bank for the world's wealthiest people.

"We urgently need to build more affordable housing in London, but unless all new homes are made available for Londoners to buy, they won't help solve the crisis."

biZrb

There's an article on The Guardian today about a price bubble in Hackney:

http://www.theguardian.com/uk-news/2014/feb/06/hackney-house-price-bubble

The market there is just insane; £300K for a flat with a bedroom that has no windows, for instance.

Trendy up and coming areas like Brixton and Peckham are going to go the same way, if a crash doesn't happen before then.

Reading articles like that put people like myself who want to buy in a tough position, I keep thinking that if I buy a flat there might be a property crash and I'll be left with an asset worth less than I paid for it but if I don't buy soon I might not be able afford where I want to live.
I am of course assuming I can afford to buy a place in the area I want, that's another thing to worry about!

jonnyfingers

biZrb wrote: »

There's an article on The Guardian today about a price bubble in Hackney:

http://www.theguardian.com/uk-news/2014/feb/06/hackney-house-price-bubble

The market there is just insane; £300K for a flat with a bedroom that has no windows, for instance.

Trendy up and coming areas like Brixton and Peckham are going to go the same way, if a crash doesn't happen before then.

Reading articles like that put people like myself who want to buy in a tough position, I keep thinking that if I buy a flat there might be a property crash and I'll be left with an asset worth less than I paid for it but if I don't buy soon I might not be able afford where I want to live.
I am of course assuming I can afford to buy a place in the area I want, that's another thing to worry about!

I'm in the same position. But as it stands I have a wedding to pay for first before building back up the savings for the deposit so I'll have to wait a few years regardless. By then we'll either all be in a bubble that's a tiny bit closer to bursting, or a nice crash will have happened and I might actually be able to afford something half decent!

djpbarry

biZrb wrote: »

Reading articles like that put people like myself who want to buy in a tough position, I keep thinking that if I buy a flat there might be a property crash and I'll be left with an asset worth less than I paid for it but if I don't buy soon I might not be able afford where I want to live.

The way I look at it, regardless of what happens in the future, property in London is ridiculously over-priced – I’m not prepared to pay hundreds of thousands of pounds for a shoddy old Victorian conversion. So buying in London right now just isn’t an option.

Playboy

djpbarry wrote: »

The way I look at it, regardless of what happens in the future, property in London is ridiculously over-priced – I’m not prepared to pay hundreds of thousands of pounds for a shoddy old Victorian conversion. So buying in London right now just isn’t an option.

I have just had an initial acceptance for a mortgage and bar a little saving I need to do to complete the deposit I am in a position where I can buy now. I'm really torn though as whether or not i should proceed, I just dont see any value for money in the market and all sorts of alarm bells are going off in my head after seeing so many people get burned with negative equity in Ireland. The other part of me thinks if i dont get on the ladder now then I wont ever be able to afford a decent property in the south east!

djpbarry

Playboy wrote: »

I'm really torn though as whether or not i should proceed, I just dont see any value for money in the market and all sorts of alarm bells are going off in my head after seeing so many people get burned with negative equity in Ireland. The other part of me thinks if i dont get on the ladder now then I wont ever be able to afford a decent property in the south east!

For me, the former will always trump the latter. Granted, I'm an inherently cautious person, but as you say, I just don't see any value for money in London property and that really overrides any concern about getting on the mythical ladder. I'm really not prepared to take on a massive mortgage for the sake of a poorly-insulated, Victorian hovel.

Playboy

djpbarry wrote: »

For me, the former will always trump the latter. Granted, I'm an inherently cautious person, but as you say, I just don't see any value for money in London property and that really overrides any concern about getting on the mythical ladder. I'm really not prepared to take on a massive mortgage for the sake of a poorly-insulated, Victorian hovel.

This is where I'm leaning towards too I think if I am honest with myself. I have toyed with the idea of buying in another part of the country as there is great value to be had outside of the south east. It would mean renting or hotels in London for 4 nights a week though and being away from the wife and child (which a lot of people I work with do) or buying a house outside of the south east, renting it out to cover the mortgage, and then continuing to rent in London. I really dont think I can be arsed with becoming a landlord though.

djpbarry

Mortgage providers now saying that a "correction" in the London market is inevitable:

Nationwide warns of 'natural correction' in house prices

Nationwide building society has warned the London housing market may face a "natural correction".

The mutual's chief executive, Graham Beale said there was already a "slowing down in the market place".

It comes as Nationwide reported its best ever year, with a four-fold rise in pre-tax annual profits to £677m, against £168m a year earlier.

Mr Beale told the BBC's business editor, Kamal Ahmed, buyers had started to baulk at ever higher house prices.

"At some point buyers just start saying no," he added.

http://www.bbc.co.uk/news/business-27599787

Marcusm

djpbarry wrote: »

Mortgage providers now saying that a "correction" in the London market is inevitable:

http://www.bbc.co.uk/news/business-27599787

Shush, stop talking down the market - at least until my outrageously priced sale goes through in the next week or so.

Long Gone

Playboy wrote: »

This is where I'm leaning towards too I think if I am honest with myself. I have toyed with the idea of buying in another part of the country as there is great value to be had outside of the south east. It would mean renting or hotels in London for 4 nights a week though and being away from the wife and child (which a lot of people I work with do) or buying a house outside of the south east, renting it out to cover the mortgage, and then continuing to rent in London. I really dont think I can be arsed with becoming a landlord though.

Have you considered commuting on intercity each day ? Plenty of places less than an hour away and the savings on housing costs more than compensate for the price of a season ticket. I hear Rugby is becoming more and more popular with commuters - Only 50 minutes from Euston on the Virgin trains.

Long Gone

Playboy wrote: »

Housing in London is in a shocking state and its good to hear someone speak up. Residential Property should be affordable and linked to a multiple of the average wage. People who work and live in London should be protected from property speculators and investors and supply should be increased to match demand from first time buyers.

We should have world peace too, but that's not going to happen anytime soon either. I agree the prices in London are ludicrous, but that is down to demand far outstripping supply. Supply can't be increased - It's all built up already ! I can see a small correction but I can't see a crash as long as the economy and the city (as in Financial Area) keeps doing so well.

djpbarry

Long Gone wrote: »

I agree the prices in London are ludicrous, but that is down to demand far outstripping supply.

Speculation has a lot to do with it too.

Reekwind

Long Gone wrote: »

Supply can't be increased - It's all built up already !

Yet that is exactly what they're planning - the Mayor is promising to build 42,000 new homes a year. (PDF)

Playboy

Long Gone wrote: »

We should have world peace too, but that's not going to happen anytime soon either. I agree the prices in London are ludicrous, but that is down to demand far outstripping supply. Supply can't be increased - It's all built up already ! I can see a small correction but I can't see a crash as long as the economy and the city (as in Financial Area) keeps doing so well.

But where is the demand coming from? Is the demand for new housing only coming from London residents who need a place to live or is it coming from wealthy foreign nationals looking for somewhere to hide their money or make a return?

I have no issue competing in a market for property with people who work and are resident here in London. If that were the case then property would be more appropriately priced. What is overheating the market in London isn't local demand, it is demand from wealthy individuals and investors with whom locals cant compete. Huge swathes of property across London still remain empty due to this issue when locals cant afford to buy a decent home unless they move an hour or two outside the city.

There is something ethically wrong with this situation imo and it is easily within the governments gift to rectify it if they so wished. However the consequences of introducing punitive measures to restrict foreign ownership could now have disastrous consequences if it caused a crash in the London Property market. Successive governments have created a dangerous scenario now due to lax oversight and policy in respect to the housing market. The political pressure to introduce solutions will intensify as more people are affected which means the opposition will likely make certain promises which could have dangerous consequences for home owners who bought at the top of the market if prices are brought back to some semblance of normal. Unfortunately I don't see any easy solutions to the issue but it will likely decide who I vote for in the next election and I'm sure many more people feel like I do.

djpbarry

Reekwind wrote: »

Yet that is exactly what they're planning - the Mayor is promising to build 42,000 new homes a year. (PDF)

The problem is that a lot of new developments are not being aimed at locals, they’re being aimed at overseas investors.

djpbarry

Playboy wrote: »

There is something ethically wrong with this situation imo and it is easily within the governments gift to rectify it if they so wished.

It’s not just unethical, it’s totally unsustainable to have a situation where an ever increasing number of workers in a city are struggling to afford the cost of living in that city.

Long Gone

djpbarry wrote: »

It’s not just unethical, it’s totally unsustainable to have a situation where an ever increasing number of workers in a city are struggling to afford the cost of living in that city.

It's heading for a situation like Monaco where almost all the workers live outside and travel in and out each day. One thing that is already happening is that the many people who aren't working (and in many cases have never worked) are being shifted out of London. The local authorities are refusing to pay for housing for them in expensive areas in London (everywhere now) and telling them that if they want to continue getting housing benefit they will have to move somewhere cheaper like Birmingham or Bristol or wherever. Difficult to argue with that - If they can't get a job in London then why should you have a right to stay in some of the most valuable property in the UK at the UK taxpayer's expense - On Yer Bike San !

djpbarry

Long Gone wrote: »

Difficult to argue with that...

Pretty easy to argue with it if you live in "Birmingham or Bristol or wherever" and London is exporting all its undesirables to your locale.