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LDN's housing market

S

spurs' magna carter

Ronnie Rosenthal
Today I couldn't help but have a little look at the house prices in my old home town of Lewisham some five years after my parents moved to Sussex. The reason for me looking was a conversation I had with a photographer whilst working during the weekned, he informed me that he and his partner had bought a flat in Tower Hamlets after moving from Brighton, they looked at 20 different properties all around the capital and were stunned by how over flated egos were once again over inflating the market with prices that were beyond unfathomable, said that the average increase is 30% per year.

During my search I came across this http://www.rightmove.co.uk/property-for-sale/property-31809627.html

At pre-market crash levels that house would've cost around £500k, infact what's more astonishing is that it costs what it does now whilst looking like Vyvyan and Rick had just vacated it, okay not that bad but nothing to get a bona over. But because it's in the middle of a town being gentrified and having those 3 famous estate agent words 'great transport links' it has to have a high price (and great commission). Whilst telling my father this he said that he had donethe same thing himself recently and spotted one house a few doors down from that one with difference between the two being a single storey side extension at a staggering £1m.

Now, seeing as our economy pretty much relies upon the housing market to double every other year and is just recovering from the worst set back in decades whilst also being centralised to London it begs the question, what would happen if the Bubble burst again? Also, is this sillyness ever gonna stop?

One point to make is Tokyo, even before the crash Japan's economy was only just recoving from the Tokyo housing market crash of the late 80s and fear LDN could be going the same way.

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Property and Estate is the easiest money anyone can make. Buy a house, do it up, sell it - if someone suggested you get a 100% on your investment (the capital to do it up rather than the capital to buy it) then you would bite their hands off. What could be simpler. Demand v supply I guess.

Transport links are a must. I live in Shepherds Bush and whilst its much more costly (on the face of it but in reality the travel cost savings definitely makes up for) than living 20 miles out. I love the convenience it offers - 25 mins into Farringdon, 15 mins into the West End and three minutes to Westfield for example.

Hence it wont stop - simply because its a dog eat dog world out there most people buy property as an investment. Why have a savings account for example when you can make greater returns from your savings buy putting that capital in a house that whilst it may experience peaks and troughs in the end the chances are you will be up on your investment. Low risk and all that.
 
Low risk? I agree entirely with what you're saying but as it is because of this our country is in debt by about 90% of its GDP, maybe not the 250% (or whatever it was) of post WW2 but that is seriously worrying, infact it's estimated to be 100% within the next few years.

Everyone blames the banks, who yes deserve a preportion of the blame but it wasn't just them, it was c***s like Barratt Homes, Foxtons etc.

Also, what happens if the burble burts and value stays down?
 
spurs' magna carter said:
Low risk? I agree entirely with what you're saying but as it is because of this our country is in debt by about 90% of its GDP, maybe not the 250% (or whatever it was) of post WW2 but that is seriously worrying, infact it's estimated to be 100% within the next few years.

Everyone blames the banks, who yes deserve a preportion of the blame but it wasn't just them, it was c***s like Barratt Homes, Foxtons etc.

Also, what happens if the burble burts and value stays down?
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Thats what I mean by peak and troughs, no doubt the bubble will burst but it will blow up again but the chances are it wont burst to the level of your investment so you will most likely be in the black most of the time.

Debt is a worry I agree but I can only speak for myself im in debt but really my debt is all in property which is secured etc and all it will take is for me to sell the property to pay back the money and ill still be in huge profit by the end of it. I think people do have lots of debt but the figures can be skewed - debt on what? If its cars, sofas etc then I agree its silly but property? never silly unless you really did make seriously ****e choices.

As far as im concerned whilst I hate banks and think theyre all *****, not sure why people blame the banks its US that are to blame - we make our choices we live and breathe by them so we should be blaming ourselves. People dont have to buy things, they can live within their means but they choose not to.

Im sure the financial lot on here may offer something more constructive but thats my opinion.
 
Makes me laugh.
Of course the market will collapse. Where is it supposed to go from here?
Houses are actually a financial liability.
 
Would you rather have a property with a huge mortgage or £150k in the bank. I'm asking this as we were debating this at work the other day.
 
Only the US and UK economies are showing any signs of life. The rest of the world economies are slowing. So we could see this rub off on London's (inflated) housing prices. But there is a lack of supply and many people still want to buy. Therefore without half a million to a million more homes available, prices will stay strong imo.

What's interesting is that a government could fix the problem pretty easily. But it wouldn't be popular. For example, build in the green belt - BUT - only where there are no conservation areas and ONLY within 10 mins walk of a train station...and you'd create 1 million more homes. There would still be plenty of countryside. Much of the green belt is unused and not particularly pretty countryside that wouldn't be missed.

But that would wipe out peoples 20 years of mortgage payments, devaluing their biggest lifetime investments. So no politician will touch it.
 
We have a stable government and currency, English is the national language, ideally situated between N America and Asia. Will always be in demand because of those factors so wouldn't expect any major crashes anytime soon really. The worse it gets in the Eurozone etc the more people put their money here as it's seen as a safe bet.
 
DTA said:
What about when interests rates go up?
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Yep I still think some of the economic incompetence of the last decade is around. People want to blame the Government of the day whichever party it is made up of, but a lot of the recession was down to individual greed, they played the game and lost.

If I had a mortgage then I would have spent the last few years saving like a mad bugger to pay it off, got an extra evening job and everything just to pay it off. But I know loads of people with mortgages who have used the low interest rates to go on holiday or spending sprees. This recession in my mind has not really hurt people enough which is why I do not think the cuts have gone far enough.

When interest rates do finally go up watch all the people with mortgages moan at the government of the day whichever party that is made up of.

The loser so far in all this? those with savings who have acted responsibly, who get bugger all return in savings accounts as interest rates are so low so have to invest in property to let out like yours truly has done.
 
japenesegardenlover said:
Yep I still think some of the economic incompetence of the last decade is around. People want to blame the Government of the day whichever party it is made up of, but a lot of the recession was down to individual greed, they played the game and lost.

If I had a mortgage then I would have spent the last few years saving like a mad bugger to pay it off, got an extra evening job and everything just to pay it off. But I know loads of people with mortgages who have used the low interest rates to go on holiday or spending sprees. This recession in my mind has not really hurt people enough which is why I do not think the cuts have gone far enough.

When interest rates do finally go up watch all the people with mortgages moan at the government of the day whichever party that is made up of.

The loser so far in all this? those with savings who have acted responsibly, who get bugger all return in savings accounts as interest rates are so low so have to invest in property to let out like yours truly has done.
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We see things pretty much the same on this. Interest rates being low is a time for you to pay back as much of your debts as possible. If you don't do this now... Then when?
 
DTA said:
We see things pretty much the same on this. Interest rates being low is a time for you to pay back as much of your debts as possible. If you don't do this now... Then when?
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Exactly right. BUT i don't think many think along those lines.

(artificially) Low interest rates have been a life support during this cycle....even people bounced on to the standard variable rate by their provider have fared well (lucky as some would not even be able to move/negotiate a new deal under new guidelines). Alas many see this as money in their pocket to spunk up the wall on the myriad of **** that they're used to buying. People cannot change...it's not in their nature. Consumer society and all that.

IIRC the new financial advice guidelines inc making customers aware what costs their mortgage would be if interest rates were this, this or this. Most would die of a heart attack if rates bounced to 5/6%.

Money is sloshing around because it has all been printed and offered at ridiculously low interest rates.....no-one has worked or created anything for this money. And that is where we are. As Chich says there has been no noticeable pain in this recession, thats because there has been no real shake out, no medicine has been taken. Usually recessions/crashes will be accompanied by high interest rates and the short sharp shake out to reach somewhere near the bottom takes place, the greedy people, silly risk takers suffer.

Not this time, and i can only guess that it was such a behemoth of a global motherf*cking meltdown where things had inlated themselves into a bubble of credit and financial charades that popping it would have made us all fall down a f*ck off sink hole.

The debt levels (especially goverments) are ridiculous. House prices on sensible multipliers are ridiculous (go figure). Wage growth is ridiculous. We are in limbo and for a long time.

Personally position yourself as best you can. Protect yourself and your family..........but whatever you do, don't blame someone else.
 
SpurMeUp said:
Only the US and UK economies are showing any signs of life. The rest of the world economies are slowing. So we could see this rub off on London's (inflated) housing prices. But there is a lack of supply and many people still want to buy. Therefore without half a million to a million more homes available, prices will stay strong imo.

What's interesting is that a government could fix the problem pretty easily. But it wouldn't be popular. For example, build in the green belt - BUT - only where there are no conservation areas and ONLY within 10 mins walk of a train station...and you'd create 1 million more homes. There would still be plenty of countryside. Much of the green belt is unused and not particularly pretty countryside that wouldn't be missed.

But that would wipe out peoples 20 years of mortgage payments, devaluing their biggest lifetime investments. So no politician will touch it.
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If by that you mean a persons main home then i wish people would stop thinking of it as an investment. It is your home. If you sell that investment, you have nowhere to live.

But i agree that we are so infatuated with property and its value that the govt (of whatever colour) are sh*t scared of the house of cards collapsing. BUT i thought they would have at least let things tick along and level of and flatline for a while. Instead they introduce some ridiculous schemes to actually encourage this charade to carry on. (maybe to help house builders as well)

Well call me stupid but i thought part of the initial problem was risky lending on inflated assets. Well unless people are paying for property with cash (admittedley russians, asians could well be) are we not just pumping up the same bubble.

It makes me think that the whole country has been run on inflated house prices (and equity withdrawl) and conveniently backed by the financial institutions of the great new financial capital of europe, London. We put a lot of eggs in that basket , making a lot of money out of thin air. The value of those private and commercial properties has to be on someones books and maybe that is where the danger lies....can this one be unwound without all hell breaking loose.
 
The savings thing is interesting. Spot on savers lose. There is effectively a tax on saving. With low interest rates and inflation, savers are losing money, effectively paying out a percentage of money, which is helping the government balance the books. Losing say 2% in real terms on your savings is not massive, but across the board, across the country, it's worth billions to the chancellor. An unintentional tax paying back some of the quantitative easing.

In the last week economists have been spooked. Germany and the US are not a rosy as we'd thought. The UK has growth but its still based on lending - housing mainly. What will it mean for houses? There's still lots of demand, and the world and London's middle classes are still earning good money, so unless lots a houses are built, prices may dip, but will stay strong imv.
 
A bigger boost to the economy would be to discourage parasitical buy to let landlords and get property in the right hands.

Their would be a huge boost to the economy if that were to happen as those people will invest a lot more time and money in their homes.
 
johnola said:
A bigger boost to the economy would be to discourage parasitical buy to let landlords and get property in the right hands.

Their would be a huge boost to the economy if that were to happen as those people will invest a lot more time and money in their homes.
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The is an interesting situation developing in Brighton where Sussex and Brighton universities between them are planning on attracting an extra 15,000 students over the next 20 years but will only build 2,000 new halls of residence. Brighton is a town with a lack of affordable housing and in fact the housing that is there is getting close to London prices in a lot of ways.

I sold a flat there 13 years ago and brought a house in worthing, which has also increased in value as people have been pushed out of Brighton. But back to Brighton I think a lot of the problem with University towns/cities is that the students are exempt from council tax. So in Brighton you have this massive increase in students living in private accommodation off campus and they are not paying council tax. Leaving local councils with a massive black hole in their accounts.
 
japenesegardenlover said:
I sold a flat there 13 years ago and brought a house in worthing, which has also increased in value as people have been pushed out of Brighton. But back to Brighton I think a lot of the problem with University towns/cities is that the students are exempt from council tax. So in Brighton you have this massive increase in students living in private accommodation off campus and they are not paying council tax. Leaving local councils with a massive black hole in their accounts.
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That is a very, very good point. I graduated from Brighton two years ago and remember very well that more than half the people in my Politics classes were in private accommodation not halls during first year. In fact I'd guess that at least a third of first year students live in private accommodation which is usually about £100 p/w.

Infact, during the weekend I went to a family reunion and my cousin, now in second year at Sussex, said he lived with 5 other people and the 6 of them are paying £103 p/w! The landlord must be p!ssing himself which really shows that this rent costing the same as a mortgage nonsense needs to stop. With a large number of first year students in private accom. the council must losing out on a lot.
 
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