London house prices?
Discussion
The bottom line on London house prices ( indeed on all house prices) indeed on all things for sale.
Is
If it's too expensive and doesnt sell the price has to come down to a level where it will sell.
London houses do sell, largely to normal people, not money launderers, not Russian billionaires, not Chinese investors.
The HUGE majority of London houses sell to people who work for a living in a regular job.
Until this stops ( and it won't) the price is the price.
Same as a TV, a car a pair of trousers pardon the pun but if it's too pricey it'll come down.
Is
If it's too expensive and doesnt sell the price has to come down to a level where it will sell.
London houses do sell, largely to normal people, not money launderers, not Russian billionaires, not Chinese investors.
The HUGE majority of London houses sell to people who work for a living in a regular job.
Until this stops ( and it won't) the price is the price.
Same as a TV, a car a pair of trousers pardon the pun but if it's too pricey it'll come down.
AyBee said:
So 2 people on average salaries with a 4x earnings mortgage can afford an average house - doesn't sound too extreme to me...
I'm guessing that's a 500k property and 60 k income per person. Fine if you have upgraded and have plenty of equity but 120 k income on 400k would bother me.Burwood said:
I'm guessing that's a 500k property and 60 k income per person. Fine if you have upgraded and have plenty of equity but 120 k income on 400k would bother me.
Do you mean you wouldnt borrow £400k to buy a home when on an income of £120k? May i ask why? How else would you better spend your money?Thankyou4calling said:
If your income is £120k then you are going to be living in a property worth considerably more than £400k I'd wager.
http://www.rightmove.co.uk/property-for-sale/prope...If not, there's always this
ky.Thankyou4calling said:
The bottom line on London house prices ( indeed on all house prices) indeed on all things for sale.
Is
If it's too expensive and doesnt sell the price has to come down to a level where it will sell.
London houses do sell, largely to normal people, not money launderers, not Russian billionaires, not Chinese investors.
The HUGE majority of London houses sell to people who work for a living in a regular job.
Until this stops ( and it won't) the price is the price.
Same as a TV, a car a pair of trousers pardon the pun but if it's too pricey it'll come down.
Spot on.Is
If it's too expensive and doesnt sell the price has to come down to a level where it will sell.
London houses do sell, largely to normal people, not money launderers, not Russian billionaires, not Chinese investors.
The HUGE majority of London houses sell to people who work for a living in a regular job.
Until this stops ( and it won't) the price is the price.
Same as a TV, a car a pair of trousers pardon the pun but if it's too pricey it'll come down.
My friend's son has just bought his first flat in Bow. He's 23. Not rich, but has a decent job, works hard, got an evening job in a bar, watched what he spent for 3 yrs, sold car, no holidays abroad, and saved up a decent deposit. A little help from bank of mum and dad, about £4K, not fortunes. And he'll have repaid that in a year or so.
I bought my first house when I was 25, 21 years ago. It cost £120K. I put down a £30K deposit and paid the £1.2K stamp duty. My mortgage was £90K which was 1.6x my salary (£42K +£10K bonus). I spent £15K replacing the bathroom, re-decorating, building a loft room etc, and then sold it 4 years later for £250K.
A similar house on the same street would now cost c.£800K:
http://www.rightmove.co.uk/property-for-sale/prope...
For a 25 year old to be in an equivalent position in 2016 they would need a £200K deposit plus £30K for stamp duty. Their mortgage would be £600K and they would need total annual earnings of around £375K for that to be a 1.6x multiple.
Clearly there are cheaper areas and properties for first time buyers, but it's so much more difficult for average people in the same position I was in (recently qualified professional, parents unable to make any financial contribution etc.).
A similar house on the same street would now cost c.£800K:
http://www.rightmove.co.uk/property-for-sale/prope...
For a 25 year old to be in an equivalent position in 2016 they would need a £200K deposit plus £30K for stamp duty. Their mortgage would be £600K and they would need total annual earnings of around £375K for that to be a 1.6x multiple.
Clearly there are cheaper areas and properties for first time buyers, but it's so much more difficult for average people in the same position I was in (recently qualified professional, parents unable to make any financial contribution etc.).
forest07 said:
Not if you want to retire early!
Again, sorry, im not trying to be pedantic, but could you explain this further?Lets do a quick fag packet sketch of the numbers, as i cant be bothered to go into too much detail, and im not a financial advisor, but roughly speaking -
£120k evenly across two earners is a take home of £7k. With one earner, its £6100.
A repayment mortgage for 25 years on £400k is currently between £1500 - £1700 depending on equity, lets be really conservative and say its £2k.
A single earner still has over £4k left. Say they stick £1k in a pension, which turns into £1400 care of HMRC, so almost £17k a year in pension, ignoring any employer contributions, you then stick £1k in an ISA. You still have £2k a month disposable income.
Split earners will have nearly £3k disposable income.
In the above scenario few financial advisors would say they were being careless. Aside from all this not only are you are borrowing incredibly efficiently on an asset that improves almost every aspect of your quality of life but its also an asset the historically has worked incredibly well in terms of providing security and increased net worth.
20 odd years in the future where are you? Conservatively circa £1m house paid for. 1/2 a bar in pension, half a bar in ISA. 20 years of happiness in a great home. Happy days.
Im sorry, i just dont get what people are complaining about in this scenario.
Or you could be a miser, stick the money under the mattress in your crappy bedsit in Luton or whever, and let inflation slowly erode it.
Edited by gibbon on Saturday 9th January 11:56
P1ato said:
I bought my first house when I was 25, 21 years ago. It cost £120K. I put down a £30K deposit and paid the £1.2K stamp duty. My mortgage was £90K which was 1.6x my salary (£42K +£10K bonus). I spent £15K replacing the bathroom, re-decorating, building a loft room etc, and then sold it 4 years later for £250K.
A similar house on the same street would now cost c.£800K:
http://www.rightmove.co.uk/property-for-sale/prope...
For a 25 year old to be in an equivalent position in 2016 they would need a £200K deposit plus £30K for stamp duty. Their mortgage would be £600K and they would need total annual earnings of around £375K for that to be a 1.6x multiple.
Clearly there are cheaper areas and properties for first time buyers, but it's so much more difficult for average people in the same position I was in (recently qualified professional, parents unable to make any financial contribution etc.).
Nice little house that.A similar house on the same street would now cost c.£800K:
http://www.rightmove.co.uk/property-for-sale/prope...
For a 25 year old to be in an equivalent position in 2016 they would need a £200K deposit plus £30K for stamp duty. Their mortgage would be £600K and they would need total annual earnings of around £375K for that to be a 1.6x multiple.
Clearly there are cheaper areas and properties for first time buyers, but it's so much more difficult for average people in the same position I was in (recently qualified professional, parents unable to make any financial contribution etc.).
Do you think its possible that the area has changed some what in 21 years? The world doesnt stand still, London has changed, theres no point in getting het up about it, you cant fight it, position yourself accordingly to make the best of your life financially, socially and professionally.
120k what a hell of a lot for a 25 year old in 1995.
gibbon said:
forest07 said:
Not if you want to retire early!
Again, sorry, im not trying to be pedantic, but could you explain this further?Lets do a quick fag packet sketch of the numbers, as i cant be bothered to go into too much detail, and im not a financial advisor, but roughly speaking -
£120k evenly across two earners is a take home of £7k. With one earner, its £6100.
A repayment mortgage for 25 years on £400k is currently between £1500 - £1700 depending on equity, lets be really conservative and say its £2k.
A single earner still has over £4k left. Say they stick £1k in a pension, which turns into £1400 care of HMRC, so almost £17k a year in pension, ignoring any employer contributions, you then stick £1k in an ISA. You still have £2k a month disposable income.
Split earners will have nearly £3k disposable income.
In the above scenario few financial advisors would say they were being careless. Aside from all this not only are you are borrowing incredibly efficiently on an asset that improves almost every aspect of your quality of life but its also an asset the historically has worked incredibly well in terms of providing security and increased net worth.
20 odd years in the future where are you? Conservatively circa £1m house paid for. 1/2 a bar in pension, half a bar in ISA. 20 years of happiness in a great home. Happy days.
Im sorry, i just dont get what people are complaining about in this scenario.
Or you could be a miser, stick the money under the mattress in your crappy bedsit in Luton or whever, and let inflation slowly erode it.
Edited by gibbon on Saturday 9th January 11:56
Add in two kids of nursery age (another 1.5k in fees), and all the usual outgoings and one is hardly awash with disposable income. A 500k property is more realistic...
Speaking from direct experience on this one not a very optimistic fag packet.
gibbon said:
Nice little house that.
Do you think its possible that the area has changed some what in 21 years? The world doesnt stand still, London has changed, theres no point in getting het up about it, you cant fight it, position yourself accordingly to make the best of your life financially, socially and professionally.
120k what a hell of a lot for a 25 year old in 1995.
I don't think Richmond has ever been a dive as such? Unlike much of now gentrified London...Do you think its possible that the area has changed some what in 21 years? The world doesnt stand still, London has changed, theres no point in getting het up about it, you cant fight it, position yourself accordingly to make the best of your life financially, socially and professionally.
120k what a hell of a lot for a 25 year old in 1995.
42k is decent money as a 25 year old 20 years ago too, sadly wages haven't done anything like what that little house in Richmond has!
I do think there are a hell of a lot of people with that HHI renting still as despite earning that cash, they cannot save anything. My mrs mentioned that she was the only one from her group of mates to have bought a place (with me), she's 28. Of my mates the same age from college etc only one has bought somewhere via help to buy in Farnham. Its either that we are the lucky two that earn well AND don't waste shedloads of cash, or there is still a pretty big mindset problem.
DoubleSix said:
120k puts you in the tax trap at an equivalent of 60% marginal rate.
Add in two kids of nursery age (another 1.5k in fees), and all the usual outgoings and one is hardly awash with disposable income. A 500k property is more realistic...
Speaking from direct experience on this one not a very optimistic fag packet.
Sticking the suggested amount in a pension avoids that at those income levels.Add in two kids of nursery age (another 1.5k in fees), and all the usual outgoings and one is hardly awash with disposable income. A 500k property is more realistic...
Speaking from direct experience on this one not a very optimistic fag packet.
To be fair, i dont have kids, and didnt budget for that in that example, but if a single earner, not an issue, partner can be a stay at home mother / father. If both working then stop the isa contributions for a few years until kids are at school. Lifes a compromise, but to say its stilly to borrow 400k to invest in a family home when you can finance at below inflation or there abouts is just daft in my opinion.
gibbon said:
DoubleSix said:
120k puts you in the tax trap at an equivalent of 60% marginal rate.
Add in two kids of nursery age (another 1.5k in fees), and all the usual outgoings and one is hardly awash with disposable income. A 500k property is more realistic...
Speaking from direct experience on this one not a very optimistic fag packet.
Sticking the suggested amount in a pension avoids that at those income levels.Add in two kids of nursery age (another 1.5k in fees), and all the usual outgoings and one is hardly awash with disposable income. A 500k property is more realistic...
Speaking from direct experience on this one not a very optimistic fag packet.
To be fair, i dont have kids, and didnt budget for that in that example, but if a single earner, not an issue, partner can be a stay at home mother / father. If both working then stop the isa contributions for a few years until kids are at school. Lifes a compromise, but to say its stilly to borrow 400k to invest in a family home when you can finance at below inflation or there abouts is just daft in my opinion.
But real world beats fag packet. Women don't necessarily want to just chuck the career and stay at home even if their earnings are low (mines a nurse). Nursery is also crucial for development imho.
Point is 'life' is just a little more complicated than you are suggesting (house need a new roof?, investment gone bad? Energy costs gone mental?), - I find this perspective that anyone earning over 100k is rich very commonplace but my garage of 'exotica' says otherwise.
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