London: Any sense renting if you can afford to buy?
Discussion
Claudia Skies said:
DonkeyApple said:
There is no denying that when you have to have the income of a junior partner in law or accounting in order to buy a house built originally for a factory worker then there is something out of whack.
Equally I cannot fathom why people with no job, or a very low paid job, are able to live in parts of London which are completely out of reach of many people WITH jobs.Ghettos are revolting whether they are in Tower Hamlets with poor chavs living off others or Knightsbridge with rich chavs living off others.
We're not French after all.
walm said:
DonkeyApple said:
There is no denying that when you have to have the income of a junior partner in law or accounting in order to buy a house built originally for a factory worker then there is something out of whack.
I agree 100% with your post and particularly this bit.I cannot fathom how this is sustainable. Affordability of housing HAS TO IMPACT THE PRICE AT SOME POINT!
The problem is, like with my short bets, the market can stay irrational longer than I can stay solvent.
Plus I sometimes feel like Chuck Prince - as long as the music is playing, you've got to get up and dance.
So should I invest in BTL in London?? Short term - YES. Mid term - NO FRIGGING WAY.
Sometimes the easier option (certainly for my blood pressure) is to leave that dance card empty.
Sure I am going to leave some money on the table but sometimes it just isn't worth the effort.
Meanwhile, locals have to finance ever more debt as a result.
The de commoditisation of resi property is arguably the single most important thing facing the UK. Let this cash go into other assets that don't inpact UK cost of living.
DonkeyApple said:
It's sustainable for as long as businessmen in third world countries need safe places to lodge wealth where their Govt cannot seize it. They don't care about yield or value just storing cash safely.
Meanwhile, locals have to finance ever more debt as a result.
The de commoditisation of resi property is arguably the single most important thing facing the UK. Let this cash go into other assets that don't inpact UK cost of living.
Is sinking 400k ie more money than needed to live out rest of anyone life reasonably well esp in a third world country into an ex council house built for a minimum wage factory worker safe? I would have though diamonds or gold that could be buried and moved would be safer than an immovable property. Doesn't really add upMeanwhile, locals have to finance ever more debt as a result.
The de commoditisation of resi property is arguably the single most important thing facing the UK. Let this cash go into other assets that don't inpact UK cost of living.
gvij said:
DonkeyApple said:
It's sustainable for as long as businessmen in third world countries need safe places to lodge wealth where their Govt cannot seize it. They don't care about yield or value just storing cash safely.
Meanwhile, locals have to finance ever more debt as a result.
The de commoditisation of resi property is arguably the single most important thing facing the UK. Let this cash go into other assets that don't inpact UK cost of living.
Is sinking 400k ie more money than needed to live out rest of anyone life reasonably well esp in a third world country into an ex council house built for a minimum wage factory worker safe? I would have though diamonds or gold that could be buried and moved would be safer than an immovable property. Doesn't really add upMeanwhile, locals have to finance ever more debt as a result.
The de commoditisation of resi property is arguably the single most important thing facing the UK. Let this cash go into other assets that don't inpact UK cost of living.
If I wanted to live in the house I grew up in which was a modest, typical detached family house I would have to pay around 8m now. At the same time, I would have no neighbours as no one lives in the houses either side part from Thai house sitters. Because they are not homes but wealth storage. The owners will already have diamonds and gold as well as probably a Manhattan apartment.
If I travel down to Mayfair and wander around I notice that very many of the houses are lived in. They are also stores. And then in Knoghtsbridge all the European tax exiles have pushed prices up hard.
A quick check on UK income stats shows that there are very few English with the earning power to buy these properties, but a quick look at the 7+ billion people on the planet and the recent massive economic booms Asia generating more new millionaires each year than exist in total in the West does show quite clearly who is inflating prime values. And they are not seeking investment yield but wealth protection and in some case tax evasion or money laundering. The English law system is prized and sold all over Asia as the reason why wealth storage in London is about the best on the planet. Someone can take your gold or diamonds, your domestic assets can be seized by the same mechanism that made you fantastically wealthy but no one can take your house in London.
The net result of this, combined with the regional impact of Boomers using excess capital to invest in resi property means that values across the whole of the UK are artificially inflated meaning every home owner must take on more debt and the cost of living increases.
There are other factors at play in London such as a huge bottom end immigration spike that underpins the slum rental market and has expanded this and made it more solid. This obviously raises bottom end values adding to the impact of rapidly elevating top end values. Plus the cultural shift of fewer higher earning economic migrants moving back out to the suburbs but choosing to stay in London to raise children rather than the historical selling up and buying into the suburban dream. And you also have pension funds now buying books of resi assets.
But underlying all of this is the very simple fact that there is too much investment capital flowing into the domestic housing market. Just like when investment capital flows too heavily into a market such as wheat and the prices of wheat spikes to the point that the people who need wheat to survive, the very people who underpin that markets existence start dying of starvation, so too excess capital flooding into a restricted housing market means the people who actually use that asset as part of their survival begin to get squeezed out.
Various people try to claim that it is a shortage of stock that is causing the boom but what they want to do is to keep the asset inflation and the associated debt spending bubble growing. The simple reality is that there is enough stock the problem is the amount of money. Start squeezing overseas and corporate ownership of residential assets, start squeezing investment assets and just watch the cost of living fall in the UK. The largest single cost of living item for anyone is currently their home and arguably half of that cost element is just to fuel a debt and spend economy and an asset bubble from excess investment capital.
Is this why GB stg is through the roof ? Large capital inflows for uk assets /stg causing it to spike? Yes very few people can pay the money asked. Saying that Ive been looking at rightmove this morning. Very nice town homes which if in London lets face it that's all your going to get in North London are still 'affordable' by successful locals at around 1.5million ie a 90% mortgage on this is going to cost around 185k pa pre tax to service . The West End is madness though agreed.
gvij said:
Is this why GB stg is through the roof ? Large capital inflows for uk assets /stg causing it to spike? Yes very few people can pay the money asked. Saying that Ive been looking at rightmove this morning. Very nice town homes which if in London lets face it that's all your going to get in North London are still 'affordable' by successful locals at around 1.5million ie a 90% mortgage on this is going to cost around 185k pa pre tax to service . The West End is madness though agreed.
The Germans have just begun printing money so every month the Euro is going to worth a little less for the next few years. So it's more the case of weakness in the Euro than strength in GBP although there will be flows in from Euros looking for a currency that isn't devaluing. Gassing Station | Finance | Top of Page | What's New | My Stuff