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The problem is that people said that 10 years ago when the costs of Victorian terraces hit £250k in my area. Everyone considered it a ridiculous price to pay for a workers cottage, and that the world had gone mad.

They were right of course, the world had gone mad, but 10 years on the world has gone even madder, the houses are selling for more than twice that value, but this time people are queueing up to buy in to it because it is now a 'good investment'.

Sentiment has completely changed and history says that this should be the time when the crash actually happens, but I can't yet see it with 0.5% IRs and 'Help To Buy' everywhere. The risk now appears to be it bubbles up even more, a 50% crash happens and it is still to expensive for most people to afford.

I am sitting on the fence, being I have no desire to move back to London again, I don't miss it one bit, I miss the old London of 30 years ago.....how things have changed in the last 20 years, could write a book......

As mentioned before IO has made a big impact in the price increases, no proof of income mortgages, (tell us what you want to borrow and we will tell you how much you have to say you should earn) and the low interest rates...the boom in BTL which in London is all IO was unheard of not that many years ago, did not exist.

Today borrowing money attitude is free money, the size of the debt is irrelevant, only the cost of servicing it matters, borrow the deposit even better if you can.....then buy what you can putting as little as possible of your own money towards it.

It is totally down to the government how they want to play this.....they can make the prices what they want them to be, their policies and how they choose to regulate the banks and pump the expansion of money supply credit. ;)

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It is insanity but remember the sales volumes are at an ALL TIME LOW. That's with Q.E., low I.R. government schemes, foreign money, immigration. This bubble has nowhere to go, there are are so many people who will and can pay massive rents, take on massive debt and risk everything.

I had a look on the Scottish/Edinburgh thread today and they guys on there are talking BIG crash figures now at the bottom end of the market, Edinburgh was meant to be different too.

Landlord informed me yesterday that he is going to (try) to sell up, and he previously said he was in it "for a pension". Something is spooking the horses up here it seems.

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To think london can defy logic for much longer is naive.

It is actually quite a big big world and there is a lot of money sloshing around in it...guess where it is going and may well continue to go.

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Gawd only knows when it'll go. It looked insane in 2003, it looks even more so nowadays. But it's worth remembering that it wasn't a straight line to get here - and not all areas of London have "benefited" to the same extent (although in fairness, the wobbly areas aren't ones many would consider living).

It may be booming on low volumes, but unless people are forced to sell - it's possible this could go on for years.

Personally, I thought the end of the Olympics would be the final turning point. Just glad I'm out of it. I like London - but you need a ridiculous amount of money to have a decent quality of life there - and housing is a big part of that problem.

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It'd be interesting to see a graph of New York prices over the last 10 or 20 years. My guess is that prices have remained insanely high even when millions had to revert to living in trailer parks elsewhere in the states.

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It'd be interesting to see a graph of New York prices over the last 10 or 20 years. My guess is that prices have remained insanely high even when millions had to revert to living in trailer parks elsewhere in the states.

Not really. Bernanke's held the correction up quite a bit though, as he has in all the better metro areas. Of course since 2008 the rate of growth of US sovereign debt has been quite modest when compared with the UK's 'austerity'.

new_york.png

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[/b]

Landlord informed me yesterday that he is going to (try) to sell up, and he previously said he was in it "for a pension". Something is spooking the horses up here it seems.

Housing benefit cap. That's what's spooking the horses. I've seen a colossal amount of rentals coming on the market recently in my area (zone 3 west London), I've never seen anything like it in 15 years. Nothing at all is letting at anything above the benefit cap (no wonder) and prices are falling through the floor.

The last few weeks I noticed a strange phenomena - houses put up for let being unable to achieve their asking rental price, and then seeing the same house put up for sale. Property bee is amazing to spot stuff like that. Also seeing a lot of properties which, from their photos at least, look like they've been rentals for a few years. Dare I say it - I'm starting to see reluctant vendors.

I don't see any desperation yet, but I reckon there's a lot of BTLers out there whose business plans won't cope with the housing benefit cap in London. lack of cashflow will force sales sooner or later. I believe the London bubble burst a few months ago!

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Housing benefit cap. That's what's spooking the horses. I've seen a colossal amount of rentals coming on the market recently in my area (zone 3 west London), I've never seen anything like it in 15 years. Nothing at all is letting at anything above the benefit cap (no wonder) and prices are falling through the floor.

The last few weeks I noticed a strange phenomena - houses put up for let being unable to achieve their asking rental price, and then seeing the same house put up for sale. Property bee is amazing to spot stuff like that. Also seeing a lot of properties which, from their photos at least, look like they've been rentals for a few years. Dare I say it - I'm starting to see reluctant vendors.

I don't see any desperation yet, but I reckon there's a lot of BTLers out there whose business plans won't cope with the housing benefit cap in London. lack of cashflow will force sales sooner or later. I believe the London bubble burst a few months ago!

Why is this catching people unawares though ?

I thought that this has been on the cards for ages ...

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Housing benefit cap. That's what's spooking the horses. I've seen a colossal amount of rentals coming on the market recently in my area (zone 3 west London), I've never seen anything like it in 15 years. Nothing at all is letting at anything above the benefit cap (no wonder) and prices are falling through the floor.

The last few weeks I noticed a strange phenomena - houses put up for let being unable to achieve their asking rental price, and then seeing the same house put up for sale.

I've observed similar. There's little for sale around here (Zone 4), but a considerable number of houses/flats have appeared for rent around the 2000pcm mark. The benefits cap takes hold in early July. I expect it will be a few months beyond that (to allow for forebearance and denial) before significant numbers give up on letting and switch to selling. Then just as things get interesting, help-to-buy will kick in during January 2014...

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Why is this catching people unawares though ?

I thought that this has been on the cards for ages ...

It certainly has been on the cards for ages. But the BTL community never believed the sky-high rents in the capital were purely a result of unrestricted housing benefit over the last few years. They assumed, wrongly, that there was a natural demand untarnished by government subsidy. How may articles about the housing benefit cap did you read where landlords were quoted saying they would kick out their tenants before lowering the rent? The implication being there were plenty of other families out there not receiving LHA who were willing and able to pay those high rents for those flea pits.

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It is totally down to the government how they want to play this.....they can make the prices what they want them to be, their policies and how they choose to regulate the banks and pump the expansion of money supply credit. ;)

Exactly how I see it which makes it so difficult to call. There's some positive comments on here (douglas & lastlaugh) re the impact on rentals that is starting to filter through and agreed that the crash is well overdue, but where this will go I have no idea anymore. My immediate problem as a Londoner (well barely, just I've left Zone 3 West London for Zone 5) is in terms of a 25 year mortgage I don't have much more time to play with. Ultimately, when I retire, I place a lot of importance on having a home that is paid for, so I'm not continuing to try and service rent (wherever that is in the country) in retirement. If I find myself heading for that situation I'll end up working a lot lot longer. Shoot me down, but I find myself more and more inclined to look at properties in other parts of the country as a BTL. A lot of people I know here have done that or are thinking about it as some sort of housing solution in retirement, rather than paying rent for eternity and coming out with nothing. London is great, my job is here, my OH is a journo so has to be in striking distance of Soho, there isn't an option of leaving, but there isn't much option of buying either.

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It is actually quite a big big world and there is a lot of money sloshing around in it...guess where it is going and may well continue to go.

Bonuses fell in London because salaries went up (sometimes 2/3x to compensate).

Demand is not the only reason that prices change. Bank credit extended, location, currency and legal structure of ownership play an important role to people who do have access to these factors as readily as people in the UK

To the chinese and indians who want to educate their children here prices have fallen due to currency fluctuations and any money in property outside China can not be repatriated by their government. London continues to be the place where Capital goes for maximum allocation. This will always create a different market.

That said, house prices in London are being carried along on this wave, sooner or later it will become apparent that the wealthy are buying a certain type of property whilst the salaried are buying another. I doubt the Chinese will by small victorian cottages outside of Kensington or even Zone 2. The properties that rose that do not gain subsequent bids because bank credit is required will fall faster. That said, as long as money is flowing into London the rich will need doctors lawyers, bankers, accountants. to make it all happen and they will pay them to do it.

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Thanks for the reply. So it may be Duncan smith on a mission against tories desperate to retain their seats at the next election, with October the time to get the popcorn in.

It certainly has been on the cards for ages. But the BTL community never believed the sky-high rents in the capital were purely a result of unrestricted housing benefit over the last few years. They assumed, wrongly, that there was a natural demand untarnished by government subsidy. How may articles about the housing benefit cap did you read where landlords were quoted saying they would kick out their tenants before lowering the rent? The implication being there were plenty of other families out there not receiving LHA who were willing and able to pay those high rents for those flea pits.

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Why is this catching people unawares though ?

I thought that this has been on the cards for ages ...

Make more in dividends and growth on the stock market...innit......no bothersome tenants to annoy and agent fees to pay. ;)

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Housing benefit cap. That's what's spooking the horses. I've seen a colossal amount of rentals coming on the market recently in my area (zone 3 west London), I've never seen anything like it in 15 years. Nothing at all is letting at anything above the benefit cap (no wonder) and prices are falling through the floor.

The last few weeks I noticed a strange phenomena - houses put up for let being unable to achieve their asking rental price, and then seeing the same house put up for sale. Property bee is amazing to spot stuff like that. Also seeing a lot of properties which, from their photos at least, look like they've been rentals for a few years. Dare I say it - I'm starting to see reluctant vendors.

I don't see any desperation yet, but I reckon there's a lot of BTLers out there whose business plans won't cope with the housing benefit cap in London. lack of cashflow will force sales sooner or later. I believe the London bubble burst a few months ago!

I hope you are right. And I thought this cap would indeed bring London rents and house prices down by a considerable amount. But I am worried by some numbers.

http://www.bbc.co.uk/news/uk-politics-22121323

Only 40,000? Even if they are all in London, that is a pitiful number in a city of some 3 million dwellings.

But this other news says that the trial will affect 40k, in those boroughs:

http://www.moneyexpert.com/news/benefits-cap-trial-set-affect-40-000-london-households/800581828

Does anybody know the correct estimate please? For the whole London?

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Bonuses fell in London because salaries went up (sometimes 2/3x to compensate).

Demand is not the only reason that prices change. Bank credit extended, location, currency and legal structure of ownership play an important role to people who do have access to these factors as readily as people in the UK

To the chinese and indians who want to educate their children here prices have fallen due to currency fluctuations and any money in property outside China can not be repatriated by their government. London continues to be the place where Capital goes for maximum allocation. This will always create a different market.

That said, house prices in London are being carried along on this wave, sooner or later it will become apparent that the wealthy are buying a certain type of property whilst the salaried are buying another. I doubt the Chinese will by small victorian cottages outside of Kensington or even Zone 2. The properties that rose that do not gain subsequent bids because bank credit is required will fall faster. That said, as long as money is flowing into London the rich will need doctors lawyers, bankers, accountants. to make it all happen and they will pay them to do it.

Trashing of sterling + infatuation with the rich + lack of rent controls = pain for the majority.

Central London rents hit £5,000 a month making it no go area for families: http://www.standard.co.uk/news/london/central-london-rents-hit-5000-a-month-making-it-no-go-area-for-families-8561702.html.

"...huge swathes of the capital turning into “millionaire ghettoes”." “Wealthy foreign buyers who own properties in these areas rarely rent them out. This has cut the pool of homes available to renters and contributed to sharp rental prices increases.”

This pushes doctors, lawyers etc out to Zone 2, with ripple effects all the way to the edge. There have also been reports of well-off French and Germans buying into Zone 2 and 3. These people would have bought in Zone 1 a few years ago.

"London is the only major city without a form of rent control and hundreds of thousands of ordinary Londoners are now paying a massive price for the huge escalation in rents throughout the capital." "...a recent survey by housing charity Shelter found that one in five spends at least 60 per cent of their take-home pay on rent."

Prime London has become an international asset class and could remain this way for decades. Personally I don't mind this if they allow new building to replace the stock taken out of the market, but with the greenbelt and planning restrictions, ordinary working Londoners are mercilessly squeezed between a rock and a hard place.

Boris continues to fiddle ("the number [of new affordable homes] actually completed halved to 8,114.", which is a pitiful amount anyway, and many of these are not really "affordable") and appears far more interested in 'celebrating the attraction of the wealthy to London' and George sees no bubble!

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Boris continues to fiddle ("the number [of new affordable homes] actually completed halved to 8,114.", which is a pitiful amount anyway, and many of these are not really "affordable") and appears far more interested in 'celebrating the attraction of the wealthy to London' and George sees no bubble!

I am sure I have seen some ads offering support to people with household income below £60k. This would be quite reasonable if it wasn't twice the average wage! If they are admitting people at this income level can't enter the market unaided, what happens to the people earning nearer the average wage? They have no chance at all.

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Boris continues to fiddle ("the number [of new affordable homes] actually completed halved to 8,114.", which is a pitiful amount anyway, and many of these are not really "affordable") and appears far more interested in 'celebrating the attraction of the wealthy to London' and George sees no bubble!

How can you have some affordable homes in an unaffordable place?.....the people that buy them at the 'affordable' price go on to sell them at the unaffordable prices. :huh:

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I'm still amazed that after 5 years of falling house prices ( in real terms ) the loonies in london are still bumping up prices and people are buying before they 'miss out'

I look at some of the asking prices round where my wife sold 2 years ago and it's insane, and with that insanity surely follows collapse.

The question is how and when ?

Will the banks deliberate collapse the bubble to cash in ?

Will people simply stop buying ( not many can be buying in reality ) ?

I don't see how it can go any higher and their will be some BIG losers at some point. it would seem London is different, it's got more idiots per square foot than anywhere else in the world.

Bubbles spell Troubles,

Well they have savers all over the UK, like you paying their mortgages for them.

The biggest beneficiaries of low mortgage rates are those with the largest mortgages. The largest mortgages are where houses are more expensive i.e. the South East. Low mortgage and saving rates are a massive transfer of wealth from the regions to the South East.

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(...) support to people with household income below £60k. (...) twice the average wage! If they are admitting people at this income level can't enter the market unaided (...)

Very well put w1. That proves that it's an unsustainable bubble.

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Very well put w1. That proves that it's an unsustainable bubble.

You'd have thought so, wouldn't you?

This government seem dangerous, though. They have basically admitted that anything below £60k income makes it difficult to get on the housing ladder and now their 'Help to Buy' scheme is available on new builds up to £600k as if that is quite a low amount for a starter home! It is just totally detached from what the vast majority of people are earning or paying for houses.

I really don't know what they think the end game is going to be if prices go up any more, but I guess they don't care as they will be thrown out at the next election and will probably try to show this policy in a positive light when campaigning to get back into government in 2020!

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I hope you are right. And I thought this cap would indeed bring London rents and house prices down by a considerable amount. But I am worried by some numbers.

http://www.bbc.co.uk/news/uk-politics-22121323

Only 40,000? Even if they are all in London, that is a pitiful number in a city of some 3 million dwellings.

But this other news says that the trial will affect 40k, in those boroughs:

http://www.moneyexpert.com/news/benefits-cap-trial-set-affect-40-000-london-households/800581828

Does anybody know the correct estimate please? For the whole London?

I think your numbers refer to the total benefit cap to jobless claimants, ie. the 40,000 is the number of unemployed claimants in the capital.

The numbers you require can be found here: DWP data on total housing benefit Claimants

Table 3. Total households claiming benefit claimants in Greater London, 841,000 of which 278,000 are in private tenancies. nd these figures are a couple of years out of date.

Here's another useful document from Shelter Breakdown by London Boroughs on Page 26

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  • 298 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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