2ndtb83

I bought a flat in Lewisham (not Blackheath) recently after 10 years in Islington and am on high five figures. The other leaseholders in my building are made up of an adviser to a Cabinet minister, an up and coming composer and a few middle ranking city types. Where I lived in N1 the neighbours appeared to be made up of the very wealthy, the old and the poor. Indeed I think I was the only person who worked among those living in the outwardly elegant street property (formerly council owned) where I was based. Tbf I prefer living among my new neighbours. The fact is London is changing. Previously down and out places are being recolonised by the professional middle classes who've been priced out of Zone 1 yet don't want to leave the city. It's a good thing. Walking around the Lewisham it's striking how many quite grand 19th century houses there are plus loads of nice solid pre-WW II terraces. It kind of feels like these neighbourhoods are slowly regaining their original character. Higher land prices will push out the very poor but that's just the market doing what it should be doing - allocating space to the most economically productive. As for those on average wages who can't afford to buy in London I sympathise with their frustration. But they're basically victims of regression to the mean. Prior to RTB policies home ownership was lower than it is now and London for decades was under occupied. It was never going to last.

It's going to fall across the board, but to different degrees. PCL is being hammered because the smart foreign money is officially on strike. I also expect that the era of ugly 1960s semis in Harrow going for £1million+ is probably coming to an end. I'd be more surprised if Victorian era properties and nice new builds in zones 1-3 fell dramatically. One of the things that people rarely mention on this forum is how what's perceived to be desirable when it comes to housing in London has changed over time. It used to be the case that if you couldn't afford a home in zone 1 your second best bet was somewhere in a leafy zone 4-6. suburb. Most of inner London was flyover territory - ugly, crime ridden and sad. That's no longer the case. The housing stock hasn't changed much and the vast social housing estates are still there, but the desirability of the leafy period streets in (say Southwark) with private housing has rocketed. This is due to the professional middle classes (who along with BTL have been driving the higher prices) now wanting to live as close to the centre as possible, or in a more peripheral area with a lively high street and bit of edge, or they want to be out of London entirely. Where they DON'T want to be is in classic suburbia (think Metroland). I grew up in Barnet not that long ago, when it was resolutely middle class. I was shocked when I went back for a visit recently to see how downhill it's gone. Alot of the money that was in place has either moved inward into the city or left for the country. So while I agree with the general consensus on here that financialisation and easy credit explains alot of the price rises, I do think supply also matters. The fact is there's isn't alot of land in inner London, which is where most people with money in this city want to live. Out of towners might mock the idea that we actually like the idea of living in a diverse community and in narrow tall Victorian houses rather than a big freehold spread. But most people who choose to live in London are here because we like the idea of living in the metropolis. Is it irrational? Yes, but so are most of the ideas around which we organise our lives. So it won't be as simple as everywhere suffering vast falls. Areas with good transport links into the centre; some nice parks for the kiddies, a critical mass of leafy residential streets with 3/4 storey Victorian houses and a decent array of local shops and bars will be relatively fine (i.d bet on their staying within 10-15 per cent of current prices). In other words, anywhere that actually feels like you're living in London. It's also worth reflecting on the fact that the majority of "average" owner occupiers who have been buying in London in the last 10 years are - by necessity - richer than previous generations of average London house buyers. They have better paying and/or more secure jobs, more savings, probably well off parents and relatives bunging them inheritances and therefore less need to sell in a downturn. There'll be the exceptions - people who need to leave the city like the French lady mentioned above or couples divorcing, as well as forced sales arising from care needs or death. That'll be where renter savers will be able to get a relative bargain, though one of the things I've noticed about London is there don't seem to be that many old people left here. But I'd be surprised if anyone is able to to pick up an immaculate three bed terrace in Walthamstow for £150K in cash any time soon. The people who've recently paid an arm and a leg for one of those, probably with a combination of help from BOMAD and their own HPI gains from the flat in Stoke Newington where they spent their twenties, aren't going to blink in the current stand off between buyers and sellers. They'll hold on for bloody life. Anywhere that's grim and boring, or where the houses are all kind of low and squat will seriously suffer e.g Harrow; Harlesden; Barking; Wembley. I'd also expect RTB flats on council estates to take a hammering, as well as studios. Obviously this all changes if there was economic armagheddon and the middle classes I mentioned above were all losing their jobs. But in that case we'd have bigger problems as a country.

This thread is really stimulating. Fwiw I think that a plentiful labour supply especially for relatively unskilled jobs does help to explain why incomes at the bottom end of the labour market haven't kept pace with the median. But migration is only part of it. Welfare reforms since 2000 means it's less tenable for a non disabled person who doesn't have young kids to doss about for years on the public's dime. Also, there are more mothers seeking part time work, lots of young British people willing to work for low wages and more healthy pensioners wanting to work a few hours every week. And that's even before you consider the vast pools of reserve labour in China, India etc who're now doing the jobs that would have once been performed in the industrial heartlands. If lots of poorly paid accession nationals go home I expect there will be some effect, but ultimately we have a lot of cheap workers doing badly paid jobs because we as consumers now demand low prices coupled with astonishing convenience from the firms we use. That is not going to change and will simply mean more robots if lots of EU accession nationals go home. I'm also sceptical that there was ever a halcyon time when social cohesion was greater. Sure there were more pubs back in the day where working men would get together but this has always been an incredibly class riven society in which those in the upper middle and higher strata view people of ordinary backgrounds and accomplishments with deep contempt. I'd argue that the degree to which this is the case is almost unique among advanced countries. There might be the odd exception in the entertainment industry but ultimately to attain (and keep hold of) senior positions in the private and public sector, for better or worse, if you weren't born to it. you need to absorb the codes and behaviours of the upper middle class. Any sense 'fellow feeling for compatriots' is fairly limited among the people who rule us. When they do deign to flag wave it tends to be ironic as at last night of the proms. And personally, I'm pleased to see the end of the pastoral England where the little man doffed his cap to the squire and led an incredibly narrow life. Sure our lives are now characterised by more risk but the average person also now enjoys far greater opportunities for self fulfilment both materially and pyschologically. The reason for more traffic is more Brits drive their own cars. In London at least the majority of immigrants are on public transport or in cabs ferrying the indigenous population about. What has really changed (as many have said in this forum before) is that the relatively brief period during the 20th century when one could be perfectly average, yet by virtue of being from the West, sit at the top of the economic tree in global terms is coming to and end. It's not surprising that many would mourn its passing but I'm more sanguine, especially since the forces driving the change are lifting hundreds of millions of people out of the most degrading poverty. Finally, I disagree with flb is about Britain's fate post Brexit. I think this country will be fine so long as we hold to the fundamental ideas about private property, rule of law, and individual autonomy that have driven us forward. I'm more worried about an increasingly prevalent mindset that lays the blame for our individual relative conditions on the government/Carney etc. We expect too much from the state's institutions. All they can realistically do is maintain the rule of law and manage public services to whatever standard we're willing to pay for through taxes. The idea that they can control the macro economic effects of deep capital flows is laughable. If we had lower expectations of their abilities and planned our lives accordingly we'd all be much happier.

Hi Like a lot of people on here I suspect the air is leaking out of the BTL market but this has led me to wonder about how the dynamics might play out in London. As far as I can tell there are several property types that characterise the rental market in London. The 4-5 beds in Zones 3-5 that have been converted into HMOs. Survival depends on low paid single migrants staying after Brexit. If lots of accession workers go home they'd presumably be sold back to OOs. Flats in tower blocks/above shops that are essentially unmortgageable but attractive to renters, especially if they're relatively central. Unless they're cash buyers, OOs can't really get these so I'd expect prices to fall hard. Decent 1-4 bed flats across Zones 1-4, often on nice streets that rent either to professional singles, small groups of singles or families on about £70K. Currently expensive but would be snapped up by younger OOs if prices fell by 40-60 percent. Nice houses in Zones 1-3 often occupied by groups of median -high paid professionals. As above would be snapped up by OOs keen to raise families if the prices fell to a point that saving for a 10% deposit was no longer a pipe dream. My question is is there any reliable data that shows the different proportions these property types make up of the overall BTL market? It'd be especially interesting to know in which sectors the newer landlords, presumably with high LTV IO mortgages are concentrated.

Or for that matter go back to 1230 and buy up swathes of SW1 like the Dukes of Westminster :-). My point was simply that there are lots of people who've been here since before the HPI explosion. They and their children didn't plan to benefit from what happened, but it happened and because most of us have no plans to leave, there's still a market, even if the prices we're willing to pay, backed up by the fake wealth in our existing houses, seem outrageous/inexplicable to more recent arrivals. I accept that if you're new to London without any prior assets to back you you up you'd need a large salary to establish a permanent base of your own. But nobody needs to be in London. We're all here by choice. I think the secret to happiness is deciding what's truly important to you and and then owning your choices.

Income gives an incomplete picture. I'm 33. Raised in Barnet to a first gen immigrant. Mother bought a three bed second hand Baratt box in N11 for £99K in 1996. By 2006 it was valued at £360K. At that stage she got a job in Canada. So she sold up and gifted me £40K to put towards a 1 bed flat in Islington which I bought for £209K. I was 22. The astonishing thing is I was a postgraduate student at the time yet Clydesdale gave me an interest only mortgage on the assumption that the flat would be let out until I started earning. I finished my studies a year later and moved into the flat. First job was around 24K. Can't remember the mortgage payment apart from that it felt like a lot. But then the recession happened and interest rates fell through the floor. Mortgage was £650/month (IO). In the ensuing 8 nine years I got married and climbed the career ladder. Now on £55K per annum. Anyway, in late 2015 I got divorced. Sold the N1 flat for 510K. As was IO Clydesdale kept 164K. I split the remainder with my ex (had realised I was gay so it was the least I could do for wasting her time). Moved into a rental in Lewisham for £1400/month whilst I plotted my next move. Discovered this website and seriously considered waiting for a few years in the hope the market would turn. Two things pushed me over the edge. First the rent (nearly half of my £3119 take home) was ball breaking. Second, a few months into the tenancy I got a message from the estate agent that my Singapore based land lady was visiting London and wanted to inspect the property. To be fair the flat was immaculate and I've no complaints about the agency's general conduct towards me. But still, the principle of it bothered me. Felt like a serf. Anyway, I found a nice one bed with sash windows, a working fireplace and parquet floors in an imposing Victorian mansion on the Lee/Blackheath borders for £320k and completed in July 2016. It's leasehold with 118 years remaining. Put £128K down to get a 60%LTV. Spent about £20K getting it up to standard and it is beautiful. I work in Vauxhall so it's 50 mins door to door. My needs aren't great (like to read, and go to the opera and theatre every week in the cheap seats). There's a brill fruit and veg market in Lewisham and a Lidl nearby so my monthly food bill is £100. I save £1400/month. Most of it will go into investment trusts wrapped in ISAs as well as the ocassional treat. For instance I spent two weeks in Zanzibar over Christmas. I've laid all this out in detail not to to refute anything said on this thread. But rather to make the point that we're all individuals with specific tastes, histories and plans and generalisations obscure that. I'm not an investment banker but I don't feel like a failure. Maybe if I lived in South Ken I would feel different. But my lived experience is generally of smart people who aren't millionaires yet lead rewarding lives in this city. I'd have loved to have spent less on my new place or to be able to own a house but as Venger would say, I've taken my market position. Yet I don't feel like a debt slave. Indeed think I lead a rich life and so long as I can keep earning should have a fairly solid financial future. Of course I could be wrong but I prefer to live on the assumption that life will be okay. Finally, I travel a lot across the UK for work and nothing I've seen beats London. Yes there are cruddy parts but there's also slot of ace stuff which balances it out. With a couple of exceptions it feels too placid out in the regions and the lure of being a freeholder simply isn't great enough to compensate for that. Granted, that is a personal view. But the impulse behind it is not uncommon and perhaps explains while there will always be a long line of people who want to live here.

Two friends currently in the process of trying to climb the ladder in London. First one put her two bed basement flat (in nice condition apart from a slight smell of damp in the hallway) on late last year for £775K. It's on the borders of Islington and Haringay. Just learnt it's been sold and she's moving into a six bed farmhouse in OXFORDSHIRE in March. Farmhouse asking price was £850K. Didn't want to ask whether she received full asking price for her flat. Another friend has a nicely refurbished two bed in Brixton. Hoping to sell for £550K in order to upgrade to a period 3 bed terrace in Brockley. Only one viewing so far in two weeks. But lesson of first friend seems to be hold out for the buyer willing to give you what you want.

Interesting blog by BOE staffer: When someone bought a house turns out to be an important factor in predicting whether the house will be sold again soon, and at what price. People who bought during a boom aim at achieving higher prices when they sell and, as a consequence, move less often. https://bankunderground.co.uk/2017/01/20/history-dependence-in-the-housing-market/#more-2516

From Inside Housing (paywall) today: http://www.insidehousing.co.uk/business/development/government-schemes/lender-shared-ownership-must-change-to-expand/7015409.article?adfesuccess=1 Key points: 1) Current legal structure provides little protection to lenders; if a tenant is evicted for not paying rent the lease as a whole is lost. (Though worth noting that the standard undertaking does actually require the landlord to consult with the bank before initiating forfeiture proceedings) 2) The small number of lenders who actually offer SO mortgages have been willing to wear this up till now because the landlords were housing associations, with whom there was a relationship of trust. 3) Nationwide's head of policy is now warning that the Govt's intention to bring more private developers into the SO scheme will make the previous arrangement less tenable. DCLG are yet to comment.

Published today (paywall) http://www.ft.com/cms/s/0/8deef4c4-23fa-11e6-9d4d-c11776a5124d.html#axzz49yGl2YEw Key points are: 1) RICS reporting the second largest decline in new inquiries since April 2008; 2) Leading to a more pessimistic outlook among surveyors re prices over the next 12 months 3) Far steeper fall in mortgage approvals in April than analysts expected (even accounting for the pre March surge) 4) Potential movers are struggling with a lack of equity due to the various types of assistance buyers received when they entered the market in the past five to seven years, giving rise to 'mortgage zombies'. All written up in usual sedate FT style but interestingly no rubbishy citations of Brexit etc.