Friday, May 29, 2015

Property boom ahead for North East and East London

The Guardian: Clean, reliable and integrated: all change for neglected rail services in London

Up until now, nothing existed between the Picadilly and Central Lines. However, with TFL taking over commuter lines from Liverpool Street this Sunday, it is all change. London is so large, that most investors and newbies know it by the tube map. Expect places north of Hackney to act as a pressure valve now. For example, a two bed home will set you back £850k in Stoke Newington, but you can get the same size property, possibly with need for updating, at just over £250k in Edmonton. For less than a 1 bed flat in Hackney. With Hackney'ies aware of what London Overground did to their patch, folk will not hold back from investing in these new hinterlands, particularly those now priced out of Hackney. Areas towards Chingford will also soar, whilst there should be steady rises along Crossrail.

Posted by libertas @ 09:54 PM (3021 views)
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1. libertas said...

This comes just seven years after TFL took over Silverlink (North London Line), turning around a service with three carriage trains, four trains per hour, replaced now with new five carriage trains and over 12 trains per hour.

It also comes at a time when sky scrapers are going ballistic at Liverpool Street.

This boom will continue unabated, with only a few hick-ups until around 2025 to 2026. Look out for a blow off top and over exuberance at around that point. However, areas in east Enfield will not suffer during this time because by that time Crossrail 2 will be a couple years away from completion, converting lines presently providing two trains an hour into a 12 train per hour mass transit system.

Friday, May 29, 2015 09:59PM Report Comment

2. libertas said...

Spoiler, I bought a house along the new railway line.

Friday, May 29, 2015 10:00PM Report Comment

3. libertas said...

Click here for the new tube map

Friday, May 29, 2015 10:06PM Report Comment

4. This comment has been removed as it was found to be in breach of our Blog Policies.


5. jack c said...

Libertas (Friday, May 29, 2015 09:59PM) "It also comes at a time when sky scrapers are going ballistic at Liverpool Street".

The past is of course no guide to the future however it is at least worth reading up on the historical link between high rise building and recession/depression and bubbles. At the same time the only thing that has asset prices riding so high is current Central Bank intervention and policy.

I'm still of the opinion that a correction/crash (call it what you will) is in the offing.

Saturday, May 30, 2015 09:49AM Report Comment

6. mister ed said...

@1 + 2 + 3 Translation

I live a sad life.

I have a dull taxpayer-funded job in local government.

I really am very boring and don't do much interesting with my life.

My only source of self-esteem is that my wealthy parents handed me a huge deposit and I have bought a house when many other people can't afford to.


The government-employee free-market Libertarian

Saturday, May 30, 2015 10:52AM Report Comment

7. icarus said...

There is a growing call for the Mayor and boroughs of London to have greater financial autonomy to invest in infrastructure and for more of the costs to be borne by local beneficiaries, who include passengers (so that part of the increase in your house price is eaten up by travel costs), residents, businesses and developers. Many US cities have earmarked property taxes to support transport systems, including taxes on mortgages. And while the mayor and boroughs of NYC get 50% of taxes paid by residents and businesses they currently get only about 7% in London.


"There is a momentum behind the idea that property owners should pay more on the unearned income from rapidly rising house prices.

"(There are calls for) a land value tax (which) charges people who own land (including freehold homes) in proportion to its value, instantly replacing lots of confused taxes with a simple and fair system. But it also has some big advantages for London.

"It would not only raise money to pay for public infrastructure in London, but also act as a brake on a runaway, boom-and-bust housing market by reducing the incentive to pay high prices and speculate on property.

"A Mayor who was able to put a tax on the value of land would get back some of that unearned profit from the rise in property prices and help to pay for the investment. The tax would also reduce the incentive to speculate on homes near the stations, and so reduce price inflation."

Saturday, May 30, 2015 12:14PM Report Comment

8. libertas said...

Actually, we could have afforded a decent flat with our deposit already, but got a boost from parents, which meant we went for a three bed house instead of a three bed flat. Yes, I work for local government but, also run a business in my spare time.

Actually, I am quite proud to be involved in local democracy, and whilst you may prefer a fascist dictatorship, I am quite pleased to work for the people of my local Borough as a public servant alongside running a business, which is associated with a non-profit organisation. Frankly, if more people ran for office and took public service jobs, we would be in a better place.


But let this not be about me. You can still get a studio peeps in these places for less than £150k. No excuses now.

And Icarus is right, this is the biggest trend happening right now. This devolution transfers massive profit streams from private franchise holders who have no long term stake in infrastructure who are bleeding our infrastructure dry, unlike a fully private ownership, or indeed the TFL situation, where the owner has incentive to invest in infrastructure. For TFL, this supports the Mayor, whereas with a private company, it supports share price and future yield.

The endgame is that the suburbs are about to have an unprecedented injection of infrastructure spending right about the time that we accelerate towards 10 million people in London (25% increase) (or maybe we are there already and they are lying to us?)

Expect similar such schemes to rapidly emerge in the neglected suburban lines in Bristol, Birmingham, Manchester, and on. Even expect to see rural Boroughs seeking devolution of poorly performing lines. Think for example the line from Exeter to Exmouth and also Barnstable for example, where a very poor service, Barnstable gets one train an hour, could be transformed with new trains, improved stations, reduced fares, increased frequencies, and progressive line extensions as profits become re-invested and ridership rises.


This is a trend that has only just begun. It is slowly replacing the fascist public / private partnership / franchise system due to it simply working better.

Meanwhile, we have a parallel private system emerging. For example, the Heathrow to Paddington service, run by a private company, owned outright, performing well, and no doubt they will expand to other routes, i.e. to Waterloo in good time, and the heritage railways are also expanding slowly but surely, and there are vintage trains that can carry commuters, so it will proceed over the next 80 years or so a return to entrepreneurial-ism both in the private and public sector, whilst cosy deals between big corporations and government are showing a lack of momentum and will fail.

Thus, government and private sector are parting and finding a new settlement simply through trial and error and a natural process of selection as one model fails and another thrives. We also see the big corporate system regulated by government via the stock markets failing with the likes of Tesco's.

This could be exciting times, and the centralisation of our economy that occured between around 1880, peaking probably in 1992 or the late 1980's is slowly going in reverse into decentralisation. Note also the multi-polar world order that is emerging away from dominant super-powers. Yes, China looks strong right now, but regionalism there is also growing and the bigger they become, the bigger they fall.

Decentralisation is thus being pursued by government due to the expediency of it becoming increasingly obvious that the marginal benefits of centralisatioon are receding and decentralisation and individualism are having their day. The big database state is a death throw of the old regime, which itself will recede as decentralised firms and others develop increasingly secure forms of communications and, to the point where there will be so much information that government Agencies will no longer be able to compute it.

So, I am pre-warning you of a 15yr bull market in property in areas benefiting from decentralisation. It began seven years ago in London with TFL taking over the North London Line, and Hackney soaring above its neglected status.

If you are out of the property market, this is your last chance to ride the bull till 2025 and the next blow off top, crack up boom, which itself will merely help consolidate present trends that will most likely last at least another generation. Probably looking at centralisation making a come back, mmm, maybe 2080 to the year 2100.

Saturday, May 30, 2015 02:34PM Report Comment

9. mister ed said...

@ 7

I'm not sure which post mentions a fascist dictatorship, but it wasn't mine.

And we're back to the old chestnut about buying a cheap place and then trading up: " You can still get a studio peeps in these places for less than £150k. No excuses now."

Yup, it's back to that good old Libby's Economic Theory of HPI

Annual wage rises of 3.5% creates annual house price inflation of 10.5%

Price of small apartment in slummy part of town = £150,000
Purchased on 3.5x salary of approx £37,000
After 15 years mortgage is paid off
Apartment is now worth £670,000

Occupant now has deposit of £670,000 and looks to move

Price of house in good part of town 15 years earlier = £350,000
House is now worth £2,235,000
Mortgage needed to trade up: £1,565,000
After wage rises of 3.5% over 15 years, salary now = £61,000
Salary multiple of mortgage now needed = 25x

Economics Fail.


Actually Libs, this is all about you. You've bought a house and you want everyone to know it. I guess that's why you keep on saying you're never going to post on this site again, only to reappear a few days later with multiple postings. :-)

Saturday, May 30, 2015 03:45PM Report Comment

10. libertas said...

You simply do not understand what is happening here in London. What is happening is, that City employees can no longer afford a first time buy in Zone 2 or 3. They are pushed out. Hackney only just became unaffordable throughout the last five years.

Putting new places on the line to Liverpool Street and through Hackney with the promise of improved railway lines means that average wage increases are immaterial.

What will occur is that an entire class of people will move out of places like Edmonton as wealthy folk from the City seeking a large house flood in to capitalise on what is a total no brainer with rail services set to explode, both with Overground, Crossrail and Crossrail 2 shifting the wealth of London into the eastern and north eastern suburbs. Expect Chingford, Woodford and Enfield to rival places like Wimbledon within a decade.


Your calculations work for somebody who is trying to move from the bottom to the top rung of the housing market in one fell swoop, in the same part of town. In reality, the person you mention will be able to mortgage equity withdraw to build an extension or, upgrade easily from a 1 to a 2 bed flat within 5yrs or 2yrs in a hot market (as many folk I know have done), then to a 2 or 3 bed house 5yrs later, or move slightly further out of town to get a bigger place. Some who move to a much larger place rent out a room to supplement the mortgage with the first £4250 tax free, and they will do this for a few years to get back on their feed.

Right now, people staying in Hackney are making baby steps up the housing ladder, i.e. move house or extend to get one extra bedroom, or move out one zone further from London and get a much larger place. Right now, for a period, folk will do the latter with the promise that London Overground and then Crossrail 2 will create massive capital increase in the space of the next five years.

Property will probably double in these locations to reach parity with locations at similar zones on the tube map. For example, 3 bed terraces in Zone 4 on Picadilly or Northern Line go for £500k to £600k plus, whilst similar sized homes in Edmonton and north Tottenham go for £280k to £380k.

Enough said, but your economics are completely wrong. You clearly do not understand the housing market.

Saturday, May 30, 2015 06:39PM Report Comment

11. mister ed said...

My calculations are based on your assertion that a 3.5% increase in wages causes a 10% annual rise in house prices, an assertion which my worked example proved conclusively wrong.


You also seem to be labouring under the illusion that everybody works within commuting distance of Enfield. They don't. Your posts are nothing more than a lot of hot air to show how clever you think you have been with your house purchase. What you have done has absolutely no bearing on the lives of 99% of the population of the UK.

Saturday, May 30, 2015 06:59PM Report Comment

12. icarus said...

libertas @7 - but part of that decentralisation may well include infrastructure investments paid for by taxing the increase in house price values caused by those investments. It's a fairly obvious source of funding that could otherwise be problematic.

Saturday, May 30, 2015 06:59PM Report Comment

13. mister ed said...

I wouldn't humour him if I was you.

"...the heritage railways are also expanding slowly but surely, and there are vintage trains that can carry commuters."


Saturday, May 30, 2015 07:16PM Report Comment

14. libertas said...

Mister Ed, I am stating a long term trend, and anticipating that the element you mock will be an important part of our infrastructure maybe by 2050.

Saturday, May 30, 2015 08:18PM Report Comment

15. mister ed said...

"I am stating a long term trend."

Sure. Just like those "sustainable" (as you put it) 10% a year house price rises are a long-term trend, resulting in the average Enfield house being worth around £2,200,000 by 2030.

It's Libbynomics.

Saturday, May 30, 2015 08:36PM Report Comment

16. libertas said...

No, I am simply stating that they will approach parity with properties in similar London Zones also on London Underground, as have other places on the Overground map. This is not my opinion, it has happened elsewhere, for example, on the Overground route to Dalston, Croydon and Clapham Junction and through Hackney.

Just because you are stupid and cannot read what I have written and have no understanding of the property market, London in particular, does not mean that reality does not exist.

Saturday, May 30, 2015 09:30PM Report Comment

17. mister ed said...

No, you have stated that a 3.5% increase in wages results in a 10% a year house price rise, which is clearly untrue

And what you have written has no bearing on almost anyone else's life but your own. Most people cannot afford to buy in Enfield, and buying a small place in an area with bad schools will not allow them to get on any perceived "housing ladder" in any case, as the prices of higher-priced houses rise more in real terms, since they rise by a percentage.

I know very well how the property market works. Over the past 20 years I have bought and sold two properties in London. I bought low and sold high.

As your first post in this thread clearly shows, you are interested only in telling people that you are better off than they are, nothing more. You are not fooling anyone, not even yourself.

Saturday, May 30, 2015 09:47PM Report Comment

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