House prices!!

[GeorgeGregan]

Everyones favourite topic I know, but given that most of you seem to be multimillionaires on the back of a huge portfolio of real estate I'd like to solicit some advice.

It seems pretty clear that the UK, and London in particular, are at the end of a housing bubble. What's not clear is whether it makes sense to buy something now anyway given that rent isn't exactly cheap and as far as I can tell if you have a big enough deposit you're still better off paying off the house you live in than paying of your landlords mortgage, assuming a huge crash isn't imminent.

e.g. interest on a £200k loan starts at about 800 per month, which is about the same as what it would cost to rent a £250k flat.

So if you were in the situation of living in London, renting, and having a reasonable deposit but no other major assets, would you take the plunge right now?

[Fungus]

Everyones favourite topic I know, but given that most of you seem to be multimillionaires on the back of a huge portfolio of real estate I'd like to solicit some advice.

It seems pretty clear that the UK, and London in particular, are at the end of a housing bubble. What's not clear is whether it makes sense to buy something now anyway given that rent isn't exactly cheap and as far as I can tell if you have a big enough deposit you're still better off paying off the house you live in than paying of your landlords mortgage, assuming a huge crash isn't imminent.

e.g. interest on a £200k loan starts at about 800 per month, which is about the same as what it would cost to rent a £250k flat.

So if you were in the situation of living in London, renting, and having a reasonable deposit but no other major assets, would you take the plunge right now?

It depends on the property. Some drop more than others at the end of a boom. So basically make sure you get somewhere desirable, rather than somewhere with an inflated price that would not sell were there not a boom.

But ... I see no end to the boom (and that is what it is). Incomes are rising, inflation is low, there is no real pain in the economy (yet), and there is huge net immigration, due mainly to Poles and other Eastern Europeans. (BTW, if you want some, we've got some spare ones you can take away. I'll get you a nice big bag to carry them in.) These people need somewhere to live, they usually rent, and so the buy to let market is helping keep the market afloat. We are talking about ~170,000 per year (according to reliable sources), which far exceed the current build capacity, so demand will continue to outstrip supply. Once Poland is empty, and the lights have been turned off, then we will see a crash.

Fungus

[AtW]

due mainly to Poles and other Eastern Europeans. (BTW, if you want some, we've got some spare ones you can take away. I'll get you a nice big bag to carry them in.) These people need somewhere to live

These people often share rooms in the cheapest possible houses - that's right, 6-8 people per house. To think that they would provide Abramovich like effect is just naive.

[Fungus]

These people often share rooms in the cheapest possible houses - that's right, 6-8 people per house. To think that they would provide Abramovich like effect is just naive.

Thankyou comrade ATW. I know they share rooms. I'm sure they crowd round steaming pots of Borscht, munching on Pyrogi, recounting tales of derring do about Spitfire flying ancesters, and toasting each other with Garlic laden vodka. But it still creates demand due to the high numbers. What is Abramovich like effect? Is it like Cherenkov radiation?

I'm thinking of learning Polish so that I can get by in Luton. What the Polish for "I have nothing against you lot, and individually you are very nice, but I find 200 thousand of you a wee bit daunting, don't you have homes to go to?".

[woo]

most people have given up waiting for prices to drop.

but now he has decided to print £ like crazy to pay for his blackhole.

I think it's coming.

[Francko]

It depends on the property. Some drop more than others at the end of a boom. So basically make sure you get somewhere desirable, rather than somewhere with an inflated price that would not sell were there not a boom.

I think most semi-central areas in London are overpriced. I could see house/flats in zone 2 with prices very near to the more central ones (i.e. consider Clapham or Shepperd Bush for example). It doesn't make sense to me as you might as well go 10 minutes further away and pay the half. I have the feeling that should an adjustment come the areas which will be more hit by that are these.

[woo]

I think most semi-central areas in London are overpriced. .

not 'most'

'all'

[wendigo100]

I'm thinking of learning Polish so that I can get by in Luton.

You used to need Urdu and Hindi to get by in Luton. So, even they have been forced out?

[OwlHoot]

most people have given up waiting for prices to drop.

but now he has decided to print £ like crazy to pay for his blackhole.

I think it's coming.

A week or two ago there was a news item saying that first time buyers are increasingly nowhere to be seen, and before long if that continues it must undermine the property market.

[VectraMan]

House prices too high? Crime on the increase? Too many speed cameras? Rubbish weather in this country? Must be the fault of those immigants, oh yes.

The problem is the whole boom and bust is intrisincally linked to whether people think there's going to be a boom or bust, so it's hard to get any real idea. I'm now thinking I really ought to buy somewhere, and it's obvious that things have slowed down considerably so you're probably more likely to get a better deal off somebody who's desperate to sell. Whether the prices collapse next year is another matter.