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ajh

Bifurcating Market?

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I wonder if a lot of the yes they are/no they're not arguments on this site are indeed caused by a pending reversion to the mean; in this case the historical price differentials between the London commuter zone (plus London itself) and the rest.

When I was in the UK on holidays in 2001, my late Aunt's rural Midlands 3-bed semi (I can't even describe it as Victorian, it was built before Victoria took the throne :)) was priced at about 40% of the same sized house (with a much smaller garden) in a town in Bucks with a tube station. So let's call the price ratio 2.5.

According to my Aunt, when she bought her cottage in the mid 90's, the price ratio would have been 4 or 5 times, but seeing as she did some renovating and extending I'll use 3.

Now when I was back in England in 2004, the ratio was 1.5 or 1.6.

Maybe we're going to see prices rise in London/SE, and stagnate or fall throughout much of the rest of the UK, until "traditional" differentials get restored. Any thoughts?

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I think there's something in this. When I moved down to the south east (1999) from lancs I was amazed at the price differentials. Now, nice surrey villages and grim lancashire ones just aren't that far apart price wise

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Guest Cletus VanDamme

I'd agree with this. The barometer I use is the price of a Barbican flat in the City of London. There was a brief time that one was *just* within my affordability range, but we missed the boat. This was in 2003 when the London market was dropping. Now the same/similar flat has since risen (asking price at least) from 250K to 330K.

So, in general, a Barbican flat will always be out of reach for me when the market is at normal levels.

I would also see in this 'Tale of Two Crashes' that new build prices are/will fall, but good properties in London will continue to rise.

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I've said this elsewhere, but my feeling is that you're right. In the 90s London and the SE fell so far it became underpriced. Then it recovered up until about 2001. Beyond that good London locations have continued to rise but only slowly. However new-builds, dodgy London areas, and the rest of the country had their biggest rises through the subsequent period.

So now IMO good London property is a bit overpriced, but not hideously so in historical terms. Bad areas and new-builds are overpriced. And the gap between London and surrounding areas in general and the rest of the country is way out of line, partly because the property frenzy (partly driven by people from the SE buying elsewhere...) kept on spreading to more and more "affordable areas" until they became unaffordable too.

I could be wrong, but I tend to think these differentials (London vs rest of country, "Good london" vs "Bad London", "Traditional" vs "new-build") will go back much closer to historic levels one way or another.

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I've said this elsewhere, but my feeling is that you're right. In the 90s London and the SE fell so far it became underpriced. Then it recovered up until about 2001. Beyond that good London locations have continued to rise but only slowly. However new-builds, dodgy London areas, and the rest of the country had their biggest rises through the subsequent period.

So now IMO good London property is a bit overpriced, but not hideously so in historical terms. Bad areas and new-builds are overpriced. And the gap between London and surrounding areas in general and the rest of the country is way out of line, partly because the property frenzy (partly driven by people from the SE buying elsewhere...) kept on spreading to more and more "affordable areas" until they became unaffordable too.

I could be wrong, but I tend to think these differentials (London vs rest of country, "Good london" vs "Bad London", "Traditional" vs "new-build") will go back much closer to historic levels one way or another.

I have nothing further constructive to add to this thread (which is perfectly fine without me) except to express my admiration for the OP getting the word "bifurcation" into the title. :)

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I sold up what I owned up north in late 2004 (save for one free of debt house a relative lives in rent free) and brought my money back down south - the boom for flats almost everywhere outside London is over - I pity those who are not BTL who are stuck with them. GF's father has two in Manchester that are an investment disaster (but as the money he put in them was liquidated profits on other investments it's just 'free speculation money' he invested and he's got no hangover debt on them he does not care 'that' much) - so he's happy collecting a net £15 a month in rent on each of them. His London flats on the other hand (that he has liquidated) made him aggregate six figure returns as he bought carefully and sold carefully - i.e. buy at low £200Ks and sell at high £200Ks three years later - but he's a bit canny like that.

Selling prices near me for large exec houses are up 25% over the last 18 months (up to about £1.25M) which is down to a complete lack of supply. It's a game many people play and by definition, there will be losers - I'd put my house on it....

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  • 301 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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