Guest englishrose Posted October 29, 2009 Share Posted October 29, 2009 OK all HPC members- for those of us in London this is what we have had to witness- as someone completely priced out it's depressing reading and having direct experience of it very very depressing - any thoughts on this madness ? What makes be sigh is the comment 'Opportunities to buy cheaply in one of the most popular capital cities of the world may come along once in a decade.' - hang on a minute when was London cheap???? http://www.uploadlibrary.com/rightmovenews/SeeMoreUK_newsletter/SeeMore_Oct09/Landing_page/LondonHPILP.html?utm_source=londonnewsletter&utm_medium=email&utm_campaign=Oct09 http://www.rightmove.co.uk/news/house-price-index/london-trends#at Quote Link to comment Share on other sites More sharing options...
SEW247 Posted October 29, 2009 Share Posted October 29, 2009 Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. Quote Link to comment Share on other sites More sharing options...
abharrisson Posted October 29, 2009 Share Posted October 29, 2009 Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. Part of the problem in central london ( K and C is my patch) is that its not really the property price but the lower pound that causes issues. Overseas buyers are entering the market sure in the knowledge if they buy now then they might expose themselves to a rising house price AND rising pound...... the long of short of it is that even if london prices fall quite a bit they'll still have done well due to the currency differences vs where we were a few years ago 750,000 euros used to get you a 500000 flat , it now gets you a 750,000 flat.... factor in a slight dip in prices since 2007 and a bit of negotiation and its no wonder they see it as a bargain. Quote Link to comment Share on other sites More sharing options...
pie-eater Posted October 29, 2009 Share Posted October 29, 2009 (edited) Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. N19, pretty central? Which EA told you that? It's as near to central as it is to outer.... And a free market doesn't pay for defaulters to default. Edited October 29, 2009 by pie-eater Quote Link to comment Share on other sites More sharing options...
Jesusaves Posted October 29, 2009 Share Posted October 29, 2009 Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. Excellent post and thread. It's all about timing, risk and LUCK. Quote Link to comment Share on other sites More sharing options...
Fairies Wear Boots Posted October 29, 2009 Share Posted October 29, 2009 Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. What a load of tosh. Some parts of London have doubled since 2003. So they must have been cheap then. And as for "neither has anywhere else" I remember in 1999 you could buy a house in this country for 50p. If that's not cheap, I don't know what is. Quote Link to comment Share on other sites More sharing options...
Dorkins Posted October 29, 2009 Share Posted October 29, 2009 Part of the problem in central london ( K and C is my patch) is that its not really the property price but the lower pound that causes issues. Overseas buyers are entering the market sure in the knowledge if they buy now then they might expose themselves to a rising house price AND rising pound...... the long of short of it is that even if london prices fall quite a bit they'll still have done well due to the currency differences vs where we were a few years ago 750,000 euros used to get you a 500000 flat , it now gets you a 750,000 flat.... factor in a slight dip in prices since 2007 and a bit of negotiation and its no wonder they see it as a bargain. Not too sure about the logic there, if London house prices fall again and the pound falls further then foreign speculators are doubly out of pocket... Seeing as the UK (especially London) had one of the biggest property bubbles in the world and we are likely to be one of the last to come out of recession, that doesn't seem far-fetched. I think euro buyers are just getting whatever the opposite of sticker shock is and are not thinking too clearly about future scenarios. Quote Link to comment Share on other sites More sharing options...
spivT Posted October 30, 2009 Share Posted October 30, 2009 Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. yes, a 'free' market. free in the sense that it required unprecedented state intervention to enable the rebound in prices. so much for the market dictating prices. Quote Link to comment Share on other sites More sharing options...
loginandtonic Posted October 30, 2009 Share Posted October 30, 2009 when upper holloway is fetching that sort of money for a 2 bed you know the madness is really dangerous, this can only end in tears Quote Link to comment Share on other sites More sharing options...
Prof Posted October 30, 2009 Share Posted October 30, 2009 yes, a 'free' market. free in the sense that it required unprecedented state intervention to enable the rebound in prices. so much for the market dictating prices. Exactly what I was just about to type. "Free" market ! Quote Link to comment Share on other sites More sharing options...
Prof Posted October 30, 2009 Share Posted October 30, 2009 when upper holloway is fetching that sort of money for a 2 bed you know the madness is really dangerous, this can only end in tears We were saying this sort of thing a couple of years back. The "tears" didn`t last very long, did they. "Happy" days are here again. Quote Link to comment Share on other sites More sharing options...
loginandtonic Posted October 30, 2009 Share Posted October 30, 2009 We were saying this sort of thing a couple of years back. The "tears" didn`t last very long, did they. "Happy" days are here again. thats because we have economists and leaders now who are far more clever than any predecessors, so recessions are shorter and things can be restored to a sound basis very quickly. if i were mercedes, why i'd even open a dealership adjacent to every council estate in inner london, because now the money & credit is given away why not milk it for all its worth. cant blame the poor for wanting a slice of the action, why should they always have their nose pressed against the glass. this govt does not in the least mind about shall we say borrowing the money from thin air or, more likely, every single one of us for the next 30 years or more Quote Link to comment Share on other sites More sharing options...
FreeTrader Posted October 30, 2009 Share Posted October 30, 2009 London FTB p/e ratio according to Nationwide (based on mean earnings for a full time worker): Quote Link to comment Share on other sites More sharing options...
scepticus Posted October 30, 2009 Share Posted October 30, 2009 London FTB p/e ratio according to Nationwide (based on mean earnings for a full time worker): Looking at the chart with a squinty eye, I would imagine that somewhere between 4 and 5X earnings, probably nearer 5 than 4 is the new normal for house prices under sustained low or zero interest rates. Definitely still some correction downwards on the cards I would say, but nowhere near as much as people are hoping. Quote Link to comment Share on other sites More sharing options...
Guest Posted October 30, 2009 Share Posted October 30, 2009 (edited) Wel my squinty eye would be more 4.5, making it 25% over valued, but in reality it should be going toward 3.5/4 over the long term and may need to over-correct to 3 ish. Edited October 30, 2009 by Guest Quote Link to comment Share on other sites More sharing options...
thedebtisreal Posted October 30, 2009 Share Posted October 30, 2009 Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. 6 times? Doesn't leave a lot left at the end of the month does it? Quote Link to comment Share on other sites More sharing options...
SEW247 Posted October 30, 2009 Share Posted October 30, 2009 N19, pretty central? Which EA told you that? It's as near to central as it is to outer.... And a free market doesn't pay for defaulters to default. Well in the context of "London" it is in Zone 2, 12 mins to Kings X by bus and less than 25 mins to Moorgate by Bus. I think it depends how you define "London"; personally I think Zone 2 is pretty damn central. With regards to your comments on EA telling me things; it's called doing your research and knowing where you want to live in order to get to work / go out / fit in with your budget. When I bought here in 2006 I was completely priced out of Islington (I know, Islington ) so naturally had to move further out. The problem for me (personally) is that my property has gone up in value around 1.5x since 2006 and now I am priced out of moving somewhere bigger in the area as they have all gone up too. It's worse for FTBs because my type of flat is exactly the sort of place a FTB would look to buy and I'm not sure how they are expected to get finance (based on the current lending issues), unless its a couple on joint salary of £100k with a decent deposit. It's a tough situation, but also doesn't help when there are very few properties being built to meet the demand (I'm talking specifically my locality). The other thing I've noticed is the number of roof conversions / basements being dug out in the area; i.e. people are staying put and improving rather than moving. I think prices in London will probably continue to rise while rates are low (<5%) and finance becomes more relaxed. I expect the death of self-certs (which I was extermely lucky to get) will lead to some clever lenders coming out with new mortgage products which are properly underwritten and risk-assessed to allow for FTB young professionals to enter the market. Quote Link to comment Share on other sites More sharing options...
Cozza Posted October 30, 2009 Share Posted October 30, 2009 (edited) Sorry, but London has never really been cheap, neither has anywhere else. It's called a free market and if someone wants to buy a house and they have finance, then they will pay what they think a house is worth, regardless. I live in N19 (pretty central) and at the moment there is very little for sale, particularly for FTBs, possibly why prices are rising. I have a number of friends with £60k+ deposits on £50k+ salaries who simply can't buy, because that 2-bed they want is £350k. It's a sad predicament really. Funny thing is that everyone laughed at me in early 2006 when I got a GMAC self-cert loan for 6x my salary and bought my place. Life is about taking chances though. You win some, you lose some. London was affordable 10 years ago. My sister bought her semi in a leafy area for £150K. Flats were going for £80K. Of course, now these same properties are more like £300k+ and £200K+ Edited October 30, 2009 by Cozza Quote Link to comment Share on other sites More sharing options...
SEW247 Posted October 30, 2009 Share Posted October 30, 2009 6 times? Doesn't leave a lot left at the end of the month does it? Well: At the time of purchasing: - £29k Salary - £180k mortgage - 5.5% fixed 2 years £825 pcm I/O - Rented out second room for £500 pcm - £29k salary is circa £1800 after tax - Council tax / Bills say £300 pcm Was I better off buying when I did, or should I have continued to rent? Quote Link to comment Share on other sites More sharing options...
Dorkins Posted October 30, 2009 Share Posted October 30, 2009 Well: At the time of purchasing: - £29k Salary - £180k mortgage - 5.5% fixed 2 years £825 pcm I/O - Rented out second room for £500 pcm - £29k salary is circa £1800 after tax - Council tax / Bills say £300 pcm Was I better off buying when I did, or should I have continued to rent? Erm, you're on an IO mortgage and not even buying it now? Saving £175pcm on rent (only possible because you are illegally not paying income tax on the rent you collect) and you're tied to a £180k debt? Holy moly. Quote Link to comment Share on other sites More sharing options...
RandomBear Posted October 30, 2009 Share Posted October 30, 2009 The problem for me (personally) is that my property has gone up in value around 1.5x since 2006 and now I am priced out of moving somewhere bigger in the area as they have all gone up too. It's worse for FTBs because my type of flat is exactly the sort of place a FTB would look to buy and I'm not sure how they are expected to get finance (based on the current lending issues), unless its a couple on joint salary of £100k with a decent deposit. This is exactly what people don't realise - there aren't really that many people for whom rising house prices are a good thing. It's obviously a real nightmare for FTBs, but for anyone who is upsizing, moving "up the ladder", HPI just increases the distance between the rungs. People feel richer when house prices go up but unless their next move is going to be a downsize, they shouldn't at all, because they are actually poorer. It took me a while to realise this. Yeah there are a lot of bitter renters on this site, but actually when you think about it there is no reason for us homeowners to not be upset as well. HPI is a wealth transfer from the young and productive and poor to the old and unproductive and rich. Quote Link to comment Share on other sites More sharing options...
SEW247 Posted October 30, 2009 Share Posted October 30, 2009 Erm, you're on an IO mortgage and not even buying it now? Saving £175pcm on rent (only possible because you are illegally not paying income tax on the rent you collect) and you're tied to a £180k debt? Holy moly. Of course I declared my rental income over the tax free threshold To rent a 2-bed flat where I am would have cost me £900 to £1200 pcn back in 2006 I forgot to say that I also put down a 25% deposit, so a £180k debt was never really a concern, even if prices had "crashed" in 2006. Besides, I now have a tracker 0.11% below BOE rate until 2013 and my salary has more than doubled since 2006 Places like mine sell for £350k+ so I have loads of equity All I'm saying, is that you have to be rational about making big decisions, but absolutely need a slice of luck too Quote Link to comment Share on other sites More sharing options...
TeddyBear Posted October 30, 2009 Share Posted October 30, 2009 Well: At the time of purchasing: - £29k Salary - £180k mortgage - 5.5% fixed 2 years £825 pcm I/O - Rented out second room for £500 pcm - £29k salary is circa £1800 after tax - Council tax / Bills say £300 pcm Was I better off buying when I did, or should I have continued to rent? How much of the mortgage have you paid off, rather than just the interest? What are the service charges? Need that to work out what really made sense... Quote Link to comment Share on other sites More sharing options...
SEW247 Posted October 30, 2009 Share Posted October 30, 2009 This is exactly what people don't realise - there aren't really that many people for whom rising house prices are a good thing. It's obviously a real nightmare for FTBs, but for anyone who is upsizing, moving "up the ladder", HPI just increases the distance between the rungs. People feel richer when house prices go up but unless their next move is going to be a downsize, they shouldn't at all, because they are actually poorer. It took me a while to realise this. Yeah there are a lot of bitter renters on this site, but actually when you think about it there is no reason for us homeowners to not be upset as well. HPI is a wealth transfer from the young and productive and poor to the old and unproductive and rich. Absolutely spot on. Exactly what I think too. For me to move to a 4-bed in my area, it will cost me £500k+ That's just not going to happen if things continue the way they are But I fear that prices will keep on going up where I am and there's nothing I can do about it Quote Link to comment Share on other sites More sharing options...
IDN Posted October 30, 2009 Share Posted October 30, 2009 Of course I declared my rental income over the tax free threshold To rent a 2-bed flat where I am would have cost me £900 to £1200 pcn back in 2006 I forgot to say that I also put down a 25% deposit, so a £180k debt was never really a concern, even if prices had "crashed" in 2006. Besides, I now have a tracker 0.11% below BOE rate until 2013 and my salary has more than doubled since 2006 Places like mine sell for £350k+ so I have loads of equity All I'm saying, is that you have to be rational about making big decisions, but absolutely need a slice of luck too well done - its all about timing - you're in a great position now - but can you say the same about FTBs buying now ? i'm not so sure Quote Link to comment Share on other sites More sharing options...
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