London Market

[Caius]

a tiny proportion of Londoners are bankers, and they are limited to a few wealthy areas (and frankly who cares if houses in Holland Park are £1bn each? 'irrelevant to the wider market).

wishful thinking on your part.

the average immigrant to London doesn't have a pot to p1ss in (and can't get credit).

But the people who once lived in Holland Park and sold to the bankers moved to the outer areas with their '£1 billion'. In turn, those in the outer areas found their properties shot up in price and moved on further out with their wad of cash pushing up property prices there and the people who used to live there.......and so on and so on until a detached house in Cornwall is now going for £500k where the average salary of the locals is say £18k.

'Average immigrants' still need a place to live in and will probably rent helping to keep the BTL phenomenon going.

[aa3]

But the people who once lived in Holland Park and sold to the bankers moved to the outer areas with their '£1 billion'. In turn, those in the outer areas found their properties shot up in price and moved on further out with their wad of cash pushing up property prices there and the people who used to live there.......and so on and so on until a detached house in Cornwall is now going for £500k where the average salary of the locals is say £18k.

'Average immigrants' still need a place to live in and will probably rent helping to keep the BTL phenomenon going.

One of the ways that is happening is with inheritance. An elderly couple pass away and the estate sells their house in a nice neighbourhood for £3 million. Each of their two children get £1.5 million.

Which they promptly upgrade their own homes which have themselves gone way up in equity over the years, and buy say a £2 million home.

When I think about it I can't really blame people for putting it all in housing. When faced with;

- bonds that yield next to nothing in a shaky currency,

- stocks in companies on an exchange where many companies have been caught falsifying past earnings but no punishment taken..

- or real estate that also has hugely gone up over the years.. they put all their money into the real estate.

[Djini]

Isn't it a was established argument now that a tiny (1%) of Londons population is stupid-rich, and their money somehow flows down to everyone else living in the vacinity in one way or another?

Like valet parking attendants rubbing their hands in excitement when it's Bankers bonus time, because they know for that month, their tips will be 10 times larger than usual, making that new carpet for their living room floor more affordable.

Then the carpet sellers know they get a surge in sales for that month too, so the shops look forward to 'bonus month'.

Same with housing, the mega-rich fighting over the 10,000 houses in the percieved prime locations pull up those prices, and the adjacent areas rise because those supporting the mega-rich (or more likely the wannabees) need to have the right postcode... This slowly pushes outwards decreasing over distance... just like the money siphend off supporting these people...

[dances with sheeple]

But the people who once lived in Holland Park and sold to the bankers moved to the outer areas with their '£1 billion'. In turn, those in the outer areas found their properties shot up in price and moved on further out with their wad of cash pushing up property prices there and the people who used to live there.......and so on and so on until a detached house in Cornwall is now going for £500k where the average salary of the locals is say £18k.

'Average immigrants' still need a place to live in and will probably rent helping to keep the BTL phenomenon going.

1st bold bit is where the chain breaks and goes into reverse,those who borrowed to keep up with those who inherited lose their shirt, default, banker gets less bonus etc etc?

[Cletus VanDamme]

But the people who once lived in Holland Park and sold to the bankers moved to the outer areas with their '£1 billion'. In turn, those in the outer areas found their properties shot up in price and moved on further out with their wad of cash pushing up property prices there and the people who used to live there

One of the ways that is happening is with inheritance. An elderly couple pass away and the estate sells their house in a nice neighbourhood for £3 million. Each of their two children get £1.5 million.

Which they promptly upgrade their own homes which have themselves gone way up in equity over the years, and buy say a £2 million home.

One of the ways that is happening is with inheritance. An elderly couple pass away and the estate sells their house in a nice neighbourhood for £3 million. Each of their two children get £1.5 million.

Which they promptly upgrade their own homes which have themselves gone way up in equity over the years, and buy say a £2 million home.

This is exactly how it works, and how the London market has been working for the last 15 years now. The other factor is right-to-buy in prime areas, where a lucky tenant would have bought their Regents Park flat for 60k or so in the late 90s/early 00s and sold it recently for 10 times that amount.

Price rises in the prime areas always push up prices in outlying areas. For example, in my neck of the woods, aspirational couples on good salaries but priced out of Crouch End start looking at Palmers Green and Enfield, and bid up prices there.

[Rachman]

This is cheaper, just down the road from me, about an hour commute to London:

http://www.rightmove.co.uk/property-for-sale/property-18582963.html

Is saving about half an hour each way each day worth that difference?

1. it isn't an hour to work in the morning. It's nearer 2. Fast train is what, an hour and 10 minutes ? Add in 15 minutes to get to the station and park up and get on the platform at Alton. Then add 20 minutes to get off the train, get on the Drain and get to Bank and up to street level. Then add another 10 minutes all told to your desk. then on the way home, you are stuck with the train service and you can't miss it, and a cab is £100.

2. an hour's drive - nope. Not a hope in hell at rush hour (which is when you go to work). Yes, it might be on a motorbike. Come back to me in February about that.

3. Weekends. The buyer of the Dalston one won't live in rural tweeville. They won't have a pint of of TEA from the Hog's Back Brewery and a packet of pork scratchings.

I think you are ascribing your values and needs to all buyers.... for me, I can see that Dalston house being far more popular with the people who earn the money... when they get older and want to move out and slow down, fine, go and chew the cud over the fence.....

[Venger]

One of the ways that is happening is with inheritance. An elderly couple pass away and the estate sells their house in a nice neighbourhood for £3 million. Each of their two children get £1.5 million.

Which they promptly upgrade their own homes which have themselves gone way up in equity over the years, and buy say a £2 million home.

They'd have to pay the £1,070,000 Inheritance Tax due before they can even get probate to properly begin administration of the estate. A commercial loan if you don't have the money. They can claim back against IHT paid for other costs in administration such as EA fees at a later point. There aren't so many people in the position you outline anyway, who already own their own homes as well as inheriting parents £3 million house. Not enough to make any real difference.

[numpty]

It will only take a call from Allah promising 100 virgin brides for some young men (not from these shores) to pull the rip cord on some dirty bombs and it could all change

[gravity always wins]

i doubt there will be a fall and totally reject any ideas of a crash in london - immigration and rich folk will see to that

I remember being told the Arabs were buying up London in the 80's buy now before its too late, then it was the Japanese, then after that it was the Russians and now the Chinese.

Been here seen it all done it all before t'was a myth then and its a myth now a handful of buyers however rich they are cannot move a market composed of some 26 Million dwelling throughout the UK.

Real Estate is an iliquid asset liable to be heavily taxed and subject over time to depreciation especially if not used, there are other more portable more liquid assets for investors to own.

[Caius]

Real Estate is an iliquid asset liable to be heavily taxed and subject over time to depreciation especially if not used, there are other more portable more liquid assets for investors to own.

Go and tell that to your Gaddafi and Musharaf types. I'm sure it will be news to them.

[Trampa501]

I remember being told the Arabs were buying up London in the 80's buy now before its too late, then it was the Japanese, then after that it was the Russians and now the Chinese.

Been here seen it all done it all before t'was a myth then and its a myth now a handful of buyers however rich they are cannot move a market composed of some 26 Million dwelling throughout the UK.

Real Estate is an iliquid asset liable to be heavily taxed and subject over time to depreciation especially if not used, there are other more portable more liquid assets for investors to own.

Yet London prices have remained high for donkeys' years, and look set to do so. How people can justify such high prices for the likes of Islington and (especially) Dalston is amazing, but still it continues. The claim now is that CrossRail will make things even more crazy price wise - yet what will Cross Rail do that the Central Line doesn't already?

[EvilEdna]

I remember being told the Arabs were buying up London in the 80's buy now before its too late, then it was the Japanese, then after that it was the Russians and now the Chinese.

Been here seen it all done it all before t'was a myth then and its a myth now a handful of buyers however rich they are cannot move a market composed of some 26 Million dwelling throughout the UK.

Real Estate is an iliquid asset liable to be heavily taxed and subject over time to depreciation especially if not used, there are other more portable more liquid assets for investors to own.

This is my feeling - the foreign buyers / bankers explanation is just ********, it can't be true. So what is powering property prices in London?

[the_duke_of_hazzard]

In SE21/SE24 (the areas I track) supply is increasing and prices are falling.

The more expensive parts of Dulwich seem to be holding up.

My suspicion has always been that this is because older people with cash who frankly don't care about how much they're paying are buying property in frustration with low returns on cash. So few properties are actually selling in these more expensive bits it's hard to tell what's really happening to prices.

The 2-bed flats and smaller, less desirable houses are definitely struggling to sell, and I can't see this improving.

[dances with sheeple]

This is exactly how it works, and how the London market has been working for the last 15 years now. The other factor is right-to-buy in prime areas, where a lucky tenant would have bought their Regents Park flat for 60k or so in the late 90s/early 00s and sold it recently for 10 times that amount.

Price rises in the prime areas always push up prices in outlying areas. For example, in my neck of the woods, aspirational couples on good salaries but priced out of Crouch End start looking at Palmers Green and Enfield, and bid up prices there.

Not enough buyers to service everyone who want`s to sell though?

[scrappycocco]

For me one of the best things about london is the tube. I'm hoping for a nice cheap place that is walking distance from any tube station but every property I keep my eye on seems to sell. I'm starting to think that with each government's obsession with house prices, prices will remain flat and only become cheaper as a result of sterling devaluation so the sheeple won't notice.

[Chicken]

London makes no sense.

Some of the worst parts of the North look positively delightful compared to London.

For example, here's a star buy (it says so on the listing page):

http://www.rightmove.co.uk/property-for-sale/property-30405967.html?premiumA=true

Star buy indeed. Might leave enough over for a stab-proof vest. Why would anyone with the money to live there, live there?

This is cheaper, just down the road from me, about an hour commute to London:

http://www.rightmove.co.uk/property-for-sale/property-18582963.html

Is saving about half an hour each way each day worth that difference?

Not that I'm trying to justify the price but that place is cheaper on a psf basis than a lot of other stuff in the area.

It's also supposed to be the coolest place in the country (http://www.guardian.co.uk/uk/2009/apr/27/dalston-cool-london-suburb), and some trendy magazine a couple of months back said it's the most exciting postcode in the world.

[gravity always wins]

Go and tell that to your Gaddafi and Musharaf types. I'm sure it will be news to them.

I have no doubt that both have real estate in the UK and probably Paris, Tokyo, New York, Shaghai - you get the point. But these guys probably bought years ago for a bolt hole.

I know the Colonel has always liked the Yellow stuff and I am sure the same is true of the General.

I am also presuming that any real estate the Colonel has in the UK has now been seized along with all his other iliquid assets.

Don't count on a few dodgy generals to keep the UK property market afloat.

[gravity always wins]

Yet London prices have remained high for donkeys' years, and look set to do so. How people can justify such high prices for the likes of Islington and (especially) Dalston is amazing, but still it continues. The claim now is that CrossRail will make things even more crazy price wise - yet what will Cross Rail do that the Central Line doesn't already?

I don't follow London but it seems to me that volumes are appalingly low in London and the prices are skewed by large purchases, neither is sustainable in the long run. Normal sales volumes are essential to a sensible economy where there is flexibility of labour and its movement, volumes can only increase as prices fall.

Its happening outside london and it will happen inside as well, London looks like the direct oposite of a sensible and sustainable housing market.

London was not imune from the last crash despite the Arabs and the Japanese.

[Austin Allegro]

London makes no sense.

Some of the worst parts of the North look positively delightful compared to London.

For example, here's a star buy (it says so on the listing page):

http://www.rightmove.co.uk/property-for-sale/property-30405967.html?premiumA=true

Star buy indeed. Might leave enough over for a stab-proof vest. Why would anyone with the money to live there, live there?

This is cheaper, just down the road from me, about an hour commute to London:

http://www.rightmove.co.uk/property-for-sale/property-18582963.html

Is saving about half an hour each way each day worth that difference?

Two seperate markets though. The Dalston house will attract overpaid, probably childless couples in a media type job or possibly the trendier sections of the law/banking, who want to live somewhere 'edgy'. I personally know one or two people like this, and they would rather live in this kind of area than somewhere safe but dull like Finchley, Wimbledon etc. After a few years slumming it and realising that they don't want their children to have classmates with knives at the age of 6, they will probably buy the Alton house.

[19 year mortgage 8itch]

This is exactly how it works, and how the London market has been working for the last 15 years now. The other factor is right-to-buy in prime areas, where a lucky tenant would have bought their Regents Park flat for 60k or so in the late 90s/early 00s and sold it recently for 10 times that amount.

Price rises in the prime areas always push up prices in outlying areas. For example, in my neck of the woods, aspirational couples on good salaries but priced out of Crouch End start looking at Palmers Green and Enfield, and bid up prices there.

Original CVD?

[DTMark]

Not that I'm trying to justify the price but that place is cheaper on a psf basis than a lot of other stuff in the area.

It's also supposed to be the coolest place in the country (http://www.guardian....l-london-suburb), and some trendy magazine a couple of months back said it's the most exciting postcode in the world.

I picked Dalston because I remember driving through it when I lived in Essex and used to go into the West End and recall it being one of the most horrendous places I'd ever seen, with crap everywhere, double parking, congested streets, run-down looking kebab shops, noise, smells ... a real "lock the doors, shut the windows, don't make eye contact and don't stop under any circumstances" type of place that made the poorest bits of Doncaster look positively affluent. Later I found another route in order to deliberately avoid that street. I'm not over-cautious. If I were, I wouldn't be driving into and around Central London.

I find the Red Kites that fly over our house and the badgers that come to our garden quite exciting. I also like going clubbing and love cities like Amsterdam and Cambridge to name two (I could live in the central area of either, but not London). I think as previously said I'm ascribing my own values to this.

You don't even have to go very far out to find somewhere for less money that's still only 25 minutes out of the city by tube or thereabouts, which is actually a nice, affluent area (footballers, TV and pop star type area) with Epping forest also on your doorstep. Just one at random, always liked the area, but could never afford it.

http://www.rightmove.co.uk/property-for-sale/property-18556341.html?premiumA=true

Value truly is in the eye of the beholder, one man's "vibrant" is another's nightmare from hell perhaps.

[pyewackitt]

Bear in mind that London prices are vastly higher than the rest of the UK... this in turn means that mortgages themselves are also vastly higher.

Whilst a % change in interest would affect everyone proportionately the impact on current repayments vs. updated repayments for someone going from say a current 5% rate to a 7-8% repayment is therefore higher in London.

Now consider that many in London are mortgaged to the hilt and are stretching affordability to max because rates have been so low for so long and you realise that when interest rates finally rise and affect SVR the wage demands of those mortgaged in London would be substantially higher than elsewhere to help meet repayments.

Whilst there may be a lot of wealthy people with ample credit and funds dormant the vast majority of people i know have spent every penny to buy in the current market, and even then not at large equity/deposit propotions.

What this means is that although London is definately a bubble that is influencing the entire UK market average upwards it is a bubble that is precariously balanced on static IR's.

We continue to be in an anomolous position regarding interest rates as we suffer the legacy of the NICE decade but without the Non-Inflationary nor the Constant Expansion elements and persist with the low interest rates element.

The BoE have used this approach to try to stiffle wage inflation and maintain some level of stability in the mortgage market but it is my opinion all they have achieved with this policy is to push even more people into the low interest rate trap.

As inflation continues to push the 5% level for the 2nd year running it is obvious that the 0.5% rate environment cannot but sustained in the long term and rates must eventually and finally move upwards.

Therefore in it many ways it is precisely because London markets appear to have suffered less than elsewhere it is subject to inherrent systemic risk at a greater proportion than other parts of the country.

- Pye

[50sQuiff]

I'd guess the policy of sterling debauchment continues to make London look relatively good value compared with other international capitals. I don't see central London crashing hard and fast until sterling enters some kind of secular uptrend relative to other fiats. That or another financial panic that takes the City down with it.

[rantnrave]

I'd guess the policy of sterling debauchment continues to make London look relatively good value compared with other international capitals. I don't see central London crashing hard and fast until sterling enters some kind of secular uptrend relative to other fiats. That or another financial panic that takes the City down with it.

IR hikes will hit London twice as hard - people who can't keep up with higher mortgage payments and overseas buyers who are deterred by a stronger Pound. It's like buy one, get one free!

[50sQuiff]

IR hikes will hit London twice as hard - people who can't keep up with higher mortgage payments and overseas buyers who are deterred by a stronger Pound. It's like buy one, get one free!

Amen brother, let's squeeze those oligarchs and BTLers until the pips squeek!