London Separates From The Uk (apparently)

[booboohoo]

...but the average salary in London is circa £60,000 last time I looked, so about 250% average UK salary (granted very unevenly distributed in London), so the multiples don't really stack up.

S.

The average salary in London is about 36k. House prices are already priced accordingly. London will burn with the rest of the country.

[Scooter]

i think you need to be seriously loaded to live comfortably in london- or you need to have paid off your mortgage- unfortunately for me i dont fall in to either of these categories.

And i completely agree about London being financial capital of europe- the only way i can see london prices plumetting is if there is a financial crisis-which decimate the financial centre- i know bears say that a hpc would cause this- im not convinced.

I am not so sure. There are only about 4000 people earning £1m+ bonuses plus rather fewer Russian oligarchs than the Mail would have you believe. There are also plenty of City workers I know who are not about to bang a large wedge into property at what may be the top of the cycle just because they can. Also, from an investment, as opposed to somewher to live, the stockmarkets may well look like a better home...

S.

[thecrashingisles]

...as bankers, hedge fund managers and lawyers cash in their bonuses on property.

He has an odd understanding of the phrase 'to cash in'....

[Scooter]

The average salary in London is about 36k. House prices are already priced accordingly. London will burn with the rest of the country.

If you are right (I may have misremembered at £60,000 which still makes property prices look mad to my mind) then I agree with you even more that it will come crashing down. When who knows...

S.

[nohpc]

I think you should be calculating your yield on current market value rather than what you paid for it which is what your figues suggest. Using current market value on my flat in W4 the yield comes out to about 4% take off fees and voids etc leaves about 3.5%. This is typical for W4.

No I'm calculating on what I paid for it. Haven't had any voids. I suppose voids are possible but I don't think I would have a problem finding new tenants if the current ones move out. You are correct I didn't include fees in my calculation but these could technically be factored out if I chose to not rent out through an estate agent and I can't really be bothered with the hassle.

[South Lorne]

This time around, banks have been more reluctant to let people over-extend themselves, and so aren't lending quite as generously as they were before.

By implying the Banks are more discerning, lending compared to the 80's crash is in my memory misleading.

Banks in the late 80's had very little Owner Occuper lending on their books then and BTLs did not even exist. Building Societies were the main lenders of mortgages and the criteria for obtaining one was fairly strict.

As far as ensuring people did not over extend themselve the Banks in the late 80's were not standing on every street corner and mall handing out credit cards. Personal lending was something ' HP companies did '.

This statement is way of the mark.

[fexx]

So after reading this thread, I think we can all safely conclude that;

London is a separate market from the rest of the UK, with the lowest rental yields in the country, salaries averaging 60K and is due a massive correction.

It is however, unlikely to crash, as a renowned financial centre with salaries averaging 36K, and the highest rental yields in the country.

The banks have not over extended themselves by lending a previously unheard of six-times salary, and although harder for service workers, they are sitting on gold mines that will soon come crashing down.

In summary: A massive house price correction will not happen, starting on 8th May 2012 at around tea-time.

Thank goodness we've got that sorted out.

[nohpc]

So after reading this thread, I think we can all safely conclude that;

London is a separate market from the rest of the UK, with the lowest rental yields in the country, salaries averaging 60K and is due a massive correction.

It is however, unlikely to crash, as a renowned financial centre with salaries averaging 36K, and the highest rental yields in the country.

The banks have not over extended themselves by lending a previously unheard of six-times salary, and although harder for service workers, they are sitting on gold mines that will soon come crashing down.

In summary: A massive house price correction will not happen, starting on 8th May 2012 at around tea-time.

Thank goodness we've got that sorted out.

exactly

[FernandoMorientes]

The financial crisis pending is the forthcoming HPC, precisley the same scenario preceded the last HPC (or GC1), and is gathering pace on a global scale the data indicate's it's now reached our shores.

Our great financial center will begin to wobble and when the inevitable occurs on the Chinese stock market the ridiculous pyramid currently propped up by financial institutions exhorting money from the consumer shall crumble down with all the speed of a pack of cards.

Then we shall see precisley what London's over hyped financial center is really all about?

The bloodbath awaits.

i think you need to be seriously loaded to live comfortably in london- or you need to have paid off your mortgage- unfortunately for me i dont fall in to either of these categories.

And i completely agree about London being financial capital of europe- the only way i can see london prices plumetting is if there is a financial crisis-which decimate the financial centre- i know bears say that a hpc would cause this- im not convinced.

[Charlie Don't Surf]

My theory on this situation is similar to the 'Big Bang' in that to some degree HPI has been fuelled by money that originates in one form or the other from London. This spreads out to the regions. However it is elastic, and sooner or later the market will stop feeding it's source and contract back into London where it will implode and we will all die in a gravitational magnetic fire storm.

OK there are a few discrepancies, but I think you get the gist!

[debtfree]

This is true. It's great here

London is Europe's (and arguably the world's) financial capital right now, and is supported by the highest GDP per head in Europe - and 45% higher than the UK national average, so this would support those views.

London is like a fresh terd with a diamond in the middle.

Its dirty and stinks, but if you wipe away all the cr4p theres a hidden gem.

Its also the home to thousands of people living in shanty towns full of £ buster shops like this:

Edited May 31, 2007 by debtfree

[too soon to buy?]

In terms of wages, London is different from the rest of the country, in fact, the rest of Europe. Where I work, people commute from tremendous distances to work in London (coming from M/C and Newcastle for example, which, if you are interested, often takes only a fraction longer than some journeys on Thameslink!!). There were even people "commuting" from Scotland and Denmark, although, admittedly, they stayed in leased hotel rooms Monday to Thursday, but even then, with train, plane, accommodation costs, it was the lure of the London Wage which brought them in and still left them quids in

However,

The fact that these guys came to London for the money, but did not live there suggests perhaps that prices are too high? Well, the people I know who do this say that they can afford to live in London, but why bother buying a 3 bed terrace for £450k when they can buy a 5 bed detatched for the same money? They also tended to be people with families established in the regions and they just did the slog commuting wise, to get London wage, but did not want to uproot the family.

In terms of average London wage Of 10 people I know well enough to know their salary, the average between us is around £70k. To be fair 8 of these guys are accountants and all work in the city. Again, nto a fair reflection on London as a whole because for every office there are cleaners, caterers, security guards, maitenance guys, painters and decorators etc so that £70k will be deminished I am sure if you throw everyone into the mixer.

Maybe everyone who does not earn a "City" wage but owns their own house in London (btw, what defines "London"? it is massive!!) bought in the 80's ?? I have no idea how they would manage it now!

[Scooter]

In terms of wages, London is different from the rest of the country, in fact, the rest of Europe. Where I work, people commute from tremendous distances to work in London (coming from M/C and Newcastle for example, which, if you are interested, often takes only a fraction longer than some journeys on Thameslink!!). There were even people "commuting" from Scotland and Denmark, although, admittedly, they stayed in leased hotel rooms Monday to Thursday, but even then, with train, plane, accommodation costs, it was the lure of the London Wage which brought them in and still left them quids in

However,

The fact that these guys came to London for the money, but did not live there suggests perhaps that prices are too high? Well, the people I know who do this say that they can afford to live in London, but why bother buying a 3 bed terrace for £450k when they can buy a 5 bed detatched for the same money? They also tended to be people with families established in the regions and they just did the slog commuting wise, to get London wage, but did not want to uproot the family.

In terms of average London wage Of 10 people I know well enough to know their salary, the average between us is around £70k. To be fair 8 of these guys are accountants and all work in the city. Again, nto a fair reflection on London as a whole because for every office there are cleaners, caterers, security guards, maitenance guys, painters and decorators etc so that £70k will be deminished I am sure if you throw everyone into the mixer.

Maybe everyone who does not earn a "City" wage but owns their own house in London (btw, what defines "London"? it is massive!!) bought in the 80's ?? I have no idea how they would manage it now!

Sadly even £70,000 does not get you that far in London.

[Johnny Cash]

No I'm calculating on what I paid for it. Haven't had any voids. I suppose voids are possible but I don't think I would have a problem finding new tenants if the current ones move out. You are correct I didn't include fees in my calculation but these could technically be factored out if I chose to not rent out through an estate agent and I can't really be bothered with the hassle.

Yield means the return you get expressed as a percentage of the current value. Not a value x years ago. You cant make a statement that "London has the best yields in the country" if you base it on todays rental return compared to an arbitrary price in the past.

If you campare the rental return you would have got when you bought the flat with the price you paid for it, then that was the yield back then. In order to talk about the yield today, you have to compare the rental return today with todays "valuation".

If you do that you will see that the yield is much lower which is why, nohpcbrain, we are, like it or not, nearer to the crash today than we were when yields were higher.

Edited May 31, 2007 by Johnny Cash

[enworb]

Having moved to Parson's Green recently I know what you mean. I love it there and wondered why I took so long to move. I know exactly why the demand is high. And prices are way above what I could afford on an IO mortgage.

But rents are still static.

The choice I seem to face now is: do I give up living in such a nice area so I can get on the ladder in somewhere like Brixton?

I dunno.

I was parked not far from the Royal Albert Hall (went to Simply Red) and was just amazed how nice all the properties were.

I'm a sucker for history and flash cars so I couldn't help but be impressed.

I don't have many regrets in life but boy do I wish i'd bought in London (the nice parts) when I had the oportunity. I would have stretched myself but in hindsight it would have been worth it.

[Smell the Fear]

If you are right (I may have misremembered at £60,000 which still makes property prices look mad to my mind) then I agree with you even more that it will come crashing down. When who knows...

S.

The average salary in Kensington and Chelsea is £60k, which gives them one of if not the highest price/salary ratio in the country of around 12 x average salary (or around 24 times average UK salary).

Ripe for a crash. Most bulls seem unaware of the fact that K&C plummeted by up to 20% during the immediate post 9/11 period. It is a MORE risky market than elsewhere in the UK because it depends on City bonuses which are volatile income streams.

[SHERWICK]

That is one of the funniest/dumbest statements i've read today (and given that i've read a few newspapers today that says a lot).

The average salary in the City might be £60k (I still think that's too high but have no figures to back it up) but the average salary in London sure as hell ain't anywhere near £60k.

A survey last month (can't remember who) showed that the average salary in The City is £51k. Of course this is skewed by the fat cats at the top though...

[Smell the Fear]

I was parked not far from the Royal Albert Hall (went to Simply Red) and was just amazed how nice all the properties were.

I'm a sucker for history and flash cars so I couldn't help but be impressed.

I don't have many regrets in life but boy do I wish i'd bought in London (the nice parts) when I had the oportunity. I would have stretched myself but in hindsight it would have been worth it.

I doubt you ever had the opportunity. Remember, when these properties were cheaper the banks would only lend 3x salary.

And the service charges for those blocks are massive!

[TimG]

...but the average salary in London is circa £60,000 last time I looked, so about 250% average UK salary (granted very unevenly distributed in London), so the multiples don't really stack up.

S.

Median london salary: £29,744 (national statistics)

[enworb]

I doubt you ever had the opportunity. Remember, when these properties were cheaper the banks would only lend 3x salary.

And the service charges for those blocks are massive!

You are probably right. I feel better now, thanks

[thedebtisreal]

I was parked not far from the Royal Albert Hall (went to Simply Red) and was just amazed how nice all the properties were.

I'm a sucker for history and flash cars so I couldn't help but be impressed.

I don't have many regrets in life but boy do I wish i'd bought in London (the nice parts) when I had the oportunity. I would have stretched myself but in hindsight it would have been worth it.

Yeah, I could've bought my current place in 2004. If I was earning what I was earning now, which I wasn't. If it ever falls to that value I would definately pile in.

The truth is as I said, rents are pretty supressed at the middle earners level (I'm paying the same rate as the last occupier). Most people with my level of income are desperately scrabbling to buy two bed holes in Newham, Brixton, North Greenwich and Canada Water, which leaves the rental space for two beds in nice areas somewhat washed out. I'll enjoy it while I can.

Nohpc - The rental yield for my place is 3.6%. That's pretty darn low. Prices rose 2.7% last month though.

[thecrashingisles]

Yeah, I could've bought my current place in 2004. If I was earning what I was earning now, which I wasn't. If it ever falls to that value I would definately pile in.

The truth is as I said, rents are pretty supressed at the middle earners level (I'm paying the same rate as the last occupier). Most people with my level of income are desperately scrabbling to buy two bed holes in Newham, Brixton, North Greenwich and Canada Water, which leaves the rental space for two beds in nice areas somewhat washed out. I'll enjoy it while I can.

Nohpc - The rental yield for my place is 3.6%. That's pretty darn low. Prices rose 2.7% last month though.

What sort of level of rent would you consider 'middle earners level' in London?

[bear call spread]

London is like a fresh terd with a diamond in the middle.

Its dirty and stinks, but if you wipe away all the cr4p theres a hidden gem.

Its also the home to thousands of people living in shanty towns full of £ buster shops like this:

Could say that about any major European capital - always going to have scummy parts - and you do not have to live in them.

I have never been to Kilburn so i will take your word for it

[Smell the Fear]

Yeah, I could've bought my current place in 2004. If I was earning what I was earning now, which I wasn't. If it ever falls to that value I would definately pile in.

The truth is as I said, rents are pretty supressed at the middle earners level (I'm paying the same rate as the last occupier). Most people with my level of income are desperately scrabbling to buy two bed holes in Newham, Brixton, North Greenwich and Canada Water, which leaves the rental space for two beds in nice areas somewhat washed out. I'll enjoy it while I can.

Nohpc - The rental yield for my place is 3.6%. That's pretty darn low. Prices rose 2.7% last month though.

Yes, the yield on the flat I'm renting is 4-4.5% gross, and 3-3.5% net of landlords costs (agents fee, insurance, maintenance etc.)

BTL is screwed - as rates are going up prices are going up (bizarre) but rents are static and yields falling. Who would buy in at this point?

[Mog]

I was in Kensington last night....what a great place to live for those that can afford to.

I'm not surprised people pay such huge amounts to live in the best areas of the city.

I'm really glad when people love Kensington and pay large amounts to live there. It keeps them away from the other bits of London that I like.

I used to live in Bayswater which is another supposedly in-demand area, and I really wasn't that fussed about it. It was OK. It wasn't cr*p, but I didn't think it was worth paying a premium for.

Not knocking anyone who want to live there, just that not all Londoners aspire to it.