London Market

[Chicken]

?

Sorry, my mistake - must have been the April edition.

[Chicken]

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.

You're right - horses for courses and all that. I do actually agree with you that Dalston is over-valued for its current level of "gentrification".

One thing that Dalston does have going for it is location - next door to hipster central (Shoreditch) and 10 minute bike ride into town.

[winkie]

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?

The prices are only high if you want/need to live there....many don't.

[miko]

, prices will remain flat and only become cheaper as a result of sterling devaluation so the sheeple won't notice.

But that is part of the problem , sterling devaluation does not help the British sheeple they are not changing another currency into sterling to buy property those from overseas are making buying a london property more attractive if you are outside the U.K.

[miko]

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.

In the 80's boom London went up more than elsewhere in the crash it also dropped more . This time it is not happening if anything it is going up more than outside London is going down . So what is the reason for it ?

If it is not the Arabs and the japanese then who , how and why is it still moving upwards ?

[miko]

Lower value homes have been snapped up to rent out affecting the mix of houses that come onto the market to be sold?

Nope I don't see that as the reason , most of London is going up . The good bits and the bad bits.

Some of homes that were lower value in the last boom and bust are anything but lower value in this boom . EX council flats in Hoxton for example . Also I don't think the mix of housing on the market has changed there is housing accross London on the market as there always was.

[scrappycocco]

But that is part of the problem , sterling devaluation does not help the British sheeple they are not changing another currency into sterling to buy property those from overseas are making buying a london property more attractive if you are outside the U.K.

Yeah but all seller sheeple see is the house price, their blind to everything else when it comes to houses. All buyer sheeple see is security of bricks and motar, bad banks holding their deposits, low rates, old people moaning to get on the ladder etc.

See the recent bbc piece interviewing people around westfield shoppping centre about that gold vending machine only one asian bloke thought gold had value, everyone else deemed it to be worthless - sheeple are blind.

[ohreally]

Prices bubbled. They bubbled in London too, therefore they will slide there as well. If prices are falling in the home counties, it will eventually filter through to London, as Londoners buy places in the home counties because they're cheaper.

All we need is some rate rises and everywhere will be toast.

1] prices in home counties are,nt falling[certainly not on the A3 corridor into london,their rising]

2]If londoners buy places in the cheaper home counties this will push prices up.

3] Rate rises & london will be toast,think it'll take more than that.

London prices are back to or above 2007 peak levels

Bank of england base rates at their highest point

2004 4.75%

2005 4.50%

2006 5.00%

2007 5.75%

2008 5.25%

2009 1.5%

2010 0.5%

now 0.5%

During the boom time/peak years interest rates were at their highest,yet prices continued to escalate,there's no way Merv will raise interest rates to above 6% in the next few years.

Prices only fell in london during the banking crisis,another banking scare would probably do the same

[miko]

Yeah but all seller sheeple see is the house price, their blind to everything else when it comes to houses. All buyer sheeple see is security of bricks and motar, bad banks holding their deposits, low rates, old people moaning to get on the ladder etc.

See the recent bbc piece interviewing people around westfield shoppping centre about that gold vending machine only one asian bloke thought gold had value, everyone else deemed it to be worthless - sheeple are blind.

So that will help keep London prices high then.

[coenbmw]

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?

I think there are more chances to die by boredom in Alton than to die by stabbing in Dalston

[porca misèria]

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.

Hmmm. I used to cycle through it on my way to work, when I lived in Leyton (a few months). Didn't seem that horrendous to me. Ordinary London streets. Not the strong slum feel of, say, parts of Bethnal Green/Stepney or Camberwell/Peckham.

[Constable]

I spoke to a London EA last week who admitted that there would have been a "bloodbath" if interest rates had not been slashed to nothing.

Let's assume that financial Armageddon doesn't happen for a moment (it will and all this talk will be irrelevant), but there are others factors at work that will crash London (but just not as fast as would have been the case with 'normal' interest rates)...

Jobs market - wages are falling in real terms and, as the economy adjusts, there are gonna be fewer and fewer people earning enough to support prices. Too many people chasing too few decent jobs means real wages will continue to fall.

Supply - don't be fooled by the immigrants rubbish, there is an over-supply of places that people are able to afford. Around me, EC1, there are loads of flats for sale/rent and plenty more going up. Prices and rents are still in bubbleland.

BTL - yields for flats in the nicer London areas are around 4%, even lower for houses in many places. Enough said.

FTB - the average age is something like 40, it really can't go much higher.

Psychology - when people realise that 2007 prices were indeed the real terms peak then London property is going to look less and less attractive as an investment. It's happening but most are still in the denial stage.

Momentum - markets don't stand still for long, even manipulated ones.

[88Crash]

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.

In 1988 I knew 2 people that had homes in London. One was in one of the best streets in London and one in one of the poorest. The rich one had a valuation of £2,500,000 (£2.5 was considered a lot of money in those days!) and the cheaper one was £75,000

Both were repo’d a few years later for £850K and £25K respectively

IMO herein lies the difference, the expensive one was in a street that is occupied by some of the UK’s and for that matter the worlds richest people, so a catastrophic repo didn’t drag the street down

The cheaper area had more similar repos in the same street and compounded in similar areas dragged down prices in the vast majority of London

For sure, there are many rich bankers or foreigners in London, but middle to low income are by far the majority and last time the rich didn’t stop London crashing by 50%+ and history does have a habit of repeating itself

[aa3]

I think it has to be the foreign money driving things up. If it was just credit availability, then it would not be different than other UK cities.

I don't think anyone knows how much foreign money is buying property in London. All we really here is rumours, like last year I read about all these super rich Greeks buying houses in London. Obviously as a way to protect their wealth.

We also only hear about the billionaire foreigners who buy a house for like £20 million. We never hear about the foreign families with like £30 million in wealth who buy 2 properties for £3 million each. The families themselves don't want to publicize how much money they have.

[Trampa501]

I think it has to be the foreign money driving things up. If it was just credit availability, then it would not be different than other UK cities.

I don't think anyone knows how much foreign money is buying property in London. All we really here is rumours, like last year I read about all these super rich Greeks buying houses in London. Obviously as a way to protect their wealth.

We also only hear about the billionaire foreigners who buy a house for like £20 million. We never hear about the foreign families with like £30 million in wealth who buy 2 properties for £3 million each. The families themselves don't want to publicize how much money they have.

I think you have a point. I've had 3 different landlords in the past in London when I rented bedsits. Two of those were foreign (Portuguese and Russian). It is true to say however that salaries are generally higher in London, and if a recovery does come, it'll be in London where the wage inflation starts first. Indeed, how many transport workers in Manchester or Glasgow can expect the same pay offer that's currently being offered to the Tube workers?

[aa3]

I think you have a point. I've had 3 different landlords in the past in London when I rented bedsits. Two of those were foreign (Portuguese and Russian). It is true to say however that salaries are generally higher in London, and if a recovery does come, it'll be in London where the wage inflation starts first. Indeed, how many transport workers in Manchester or Glasgow can expect the same pay offer that's currently being offered to the Tube workers?

One thing I wonder about is the opportunity that the foreign money provides in like maintaing and upgrading houses. For example I was noticing in browsing stupidly expensive homes on rightmove all the inhome theater systems and the lighting control systems. Someone is installing those things.

Same with things like kitchen rennovations and re-roofing. I am guessing wealthy foreigners are not cheaping out or doing it themselves.

[thejaksie]

I think it has to be the foreign money driving things up. If it was just credit availability, then it would not be different than other UK cities.

I don't think anyone knows how much foreign money is buying property in London. All we really here is rumours, like last year I read about all these super rich Greeks buying houses in London. Obviously as a way to protect their wealth.

We also only hear about the billionaire foreigners who buy a house for like £20 million. We never hear about the foreign families with like £30 million in wealth who buy 2 properties for £3 million each. The families themselves don't want to publicize how much money they have.

For sure there are rich foreigners buying - but this only extends to the best areas. You can forget about wealthy foreigners buying 2beds in E14, E8, E6, the list can go on endlessly. If the price erosion starts happening in those areas (which has started already in E14 with hunderds of flats for sale and prices coming down) this will affect the more expensive areas in the end. People overestimate the effect of wealthy buyers on ordinary property - there is no correlation. On the flip side people underestimate how prices affect migration between areas. I live in central london, E1W, but if prices continue to slide outside london I will happily migrate outside london , and this applies to many more.

[thejaksie]

Supply - don't be fooled by the immigrants rubbish, there is an over-supply of places that people are able to afford. Around me, EC1, there are loads of flats for sale/rent and plenty more going up. Prices and rents are still in bubbleland.

In E14 there are 100s of flats of sale , most of which aren't selling. Prices are dropping already and still not selling. There is plenty of supply, the prices are just unrealistic and as a result there are no sales. The shortage of supply is changing rapidly and I think we are near a tipping point.

This week was a historical week for me: for the 1st time ever I've been contacted by 3 agents trying to sell different flats. All in all I've been actively looking at flats for around 9-12 months over the past 5 years and until this week no agent had ever phoned me to offer a flat.

[rantnrave]

A year ago, talk on this site and elsewhere was how the SE was immune to falls. Six months ago, that changed to London. Now I'm seeing references to how well prices are holding up in Prime Central London. I think there's a clear trend here...

[APAC]

True that. Mind you the Isle of Dogs felt the same in the early - mid 90s. Hardly recognisable now.

I don't think prices have moved much in the last five years in some parts of east London. In 2005, there were places where you could get a 2BR terrace for around £160K - and that's still just about true now (although they have been lower in around 2008/9 and are slowly creeping up). Although there was a period in around 2006/7 when said terraces were closer to £200K.

Elsewhere in London - it seems to have gone absolutely nuts.

I think London differs from the rest of the UK because it is an international market. Attracts interests from overseas buyers. I am not sure if other parts of the UK garner similar interest. In addition the economic activity - financial and insurance attract both local and overseas companies(London is an international financial hub). This also attracts foriegn workers. Thus when you look at price correlations - london has low correlation to the rest of the UK.

[Dorkins]

I think London differs from the rest of the UK because it is an international market.

Thankfully foreigners are completely immune to economic downturns.

[Si1]

I think London differs from the rest of the UK because it is an international market. Attracts interests from overseas buyers. I am not sure if other parts of the UK garner similar interest. In addition the economic activity - financial and insurance attract both local and overseas companies(London is an international financial hub). This also attracts foriegn workers. Thus when you look at price correlations - london has low correlation to the rest of the UK.

oh ffs

what nonsense, it is a bubble attracting bubble chasers with foreign money

end of

[Timak]

Yeah but all seller sheeple see is the house price, their blind to everything else when it comes to houses. All buyer sheeple see is security of bricks and motar, bad banks holding their deposits, low rates, old people moaning to get on the ladder etc.

See the recent bbc piece interviewing people around westfield shoppping centre about that gold vending machine only one asian bloke thought gold had value, everyone else deemed it to be worthless - sheeple are blind.

Gold only has value like any other commodity. I hate all this mystique around Gold, all it is is an easily traded commodity with world wide demand hence being a useful inflation hedge as someone somewhere will want it. It is no different to investing in any other similar asset like oil .

Anything sold from a vending machine at a shopping centre is hardly going to represent the best available deal on the market either.

Do I wish I'd bought some at $600 an ounce when I looked a few years ago, of course, but then I wish I'd bought a few houses in 2000 too.

[the_duke_of_hazzard]

In the 80's boom London went up more than elsewhere in the crash it also dropped more . This time it is not happening if anything it is going up more than outside London is going down . So what is the reason for it ?

If it is not the Arabs and the japanese then who , how and why is it still moving upwards ?

A multi decade shift back fro the suburbs to central London.

[miko]

A multi decade shift back fro the suburbs to central London.

But the suburbs are still going up as well , if they were all shifting back into town the suburbs would be dropping but they are not.