Housing in the UK

[Captain Chaos]

I find it bizarre that house price rises are so celebrated. In this country in particular. I don't hear many people celebrating at work. Nor many people my own age. If any. The only people I can think of are those who can afford to invest in property etc. Do most people actually care what their home is currently worth? Does it truly matter? House prices and our obsession with their rise has always confused me. If they get to a point where most ordinary folk cannot realistically afford them then how can the market be sustainable? You need new buyers in the market. Otherwise all you get is property just swapping hands with people in the hope of making a few quid. It no longer becomes a house or a property or a home. It just becomes stock in a sort of stock market.

It's stupid. I haven't got anything against people wanting to make a few quid. Far from it. But I think it's all gone to far.
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Typically you should be able to borrow four times as much as your salary. I totally agree with you though as to how difficult it is. I'm looking at buying in the next 3 or so years but I will have to move way out of London and commute in. Even from February I will have to look at renting again as my current flatmate will be moving on. I'm really struggling to find anywhere affordable that is in reasonable condition for my budget, anywhere near an Underground station.

Indeed. I wanted to move to Reading. Knew I'd never be able to buy so looked at renting. On my basic salary alone (tying not to fall into the trap of relying on overtime and commission etc. Being sensible) I would have around £100 - £200 per month left over after all bills, food etc. It's not really affordable on my own. I could do it. But each month would be rather tight.

I looked at moving to Swindon. I'd be around £300 - £500 left over (fluctuations are for variable things such as car running costs. Heavy use or light use depending on shifts). It's a no brainer. I might, MIGHT even be able to buy in Swindon at some point. But it's mad that you have to move 40 miles away from a place to find something affordable on your own on a Guards wage. It ain't exactly a poor wage now!

EDIT: I will also add that the property in Reading would be a 1 Bed Flat in a reasonable area. You can get 2 Bed's for similar in not too bad areas if you're lucky. The Swindon example is for a minimum 2 Bed Flat in a Good area of Swindon (Old Town. Not a bad area I have been told by my any colleagues who live there). You can get a 3 Bed House if willing to pay a little bit more. You'd still be better off when compared to Reading.

 

[soil]

We looked at moving to Reading (from Woking) because it's so much cheaper than Surrey.

These things are relative.

People move to Woking because it's much cheaper than Kingston.

And so on.

 

[Johnuk123]

Somebody said we have to have more houses, It's not more urbanisation of the countryside that's needed, it's less people coming in.

 

[Clip]

Not all of the south east is expensive to buy houses, you can pay quite a reasonable sum in my neck of the woods (and a bit further south)

I'm not familiar with the London housing market but having watched programs such as Location Location I was shocked to see a house comparable to mine (3 bed semi) cost almost twice that as it does here in manchester! I knew prices wee higher but I never really thought they would be so much higher.

It really all depends on where you want to buy in London though - there are still some areas where you are able to pick up a bargain or two. And I have been telling anyone and everyone who is looking to buy that now is the time to invest in Woolwich/Plumstead/Abbey wood/Thamesmead way. Prices are slowly creeping up now because of crossrail but you can still pick up a 5 bed house for decent money

CLICK

 

[Manchester77]

Wow thats pretty decent comparable to similar types of housing in my area! To be fair my assumptions were based on programs which had focused their search in West London (Hounslow, Surbiton area?)

 

[radamfi]

You don't have to live in the south-east to have a decent life. Most people still don't live there.

Burnley is still quite cheap.

http://www.zoopla.co.uk/for-sale/pr...sults_sort=highest_price&search_source=refine

You can commute from Burnley to Leeds, Preston and Manchester (using fast bus X43 and soon via Todmorden curve).

 

[Clip]

Wow thats pretty decent comparable to similar types of housing in my area! To be fair my assumptions were based on programs which had focused their search in West London (Hounslow, Surbiton area?)

Indeed and people dont realise this because they dont know the areas to look.

Mind you a friend of mine sold her 2 bed ground floor flat on a main road in Brixton last month for £405K. Go figure

 

[jon0844]

When I moved out of London, everyone I 'left behind' thought I was mad. Admittedly, I did stop seeing people as often - but I still think it was the right move.

Over the years since, nearly everyone has begun to move out too. It's the only thing you can do when you no longer want to live in a shoe box or need more rooms after having children etc.

Sadly, with the way house prices shot up (and are still creeping up), once you move out - the chances are you'll never be able to move back. That is unless you want to seriously downsize and eradicate any savings or equity you might have.

As I've said many times on here when talking about property prices - I feel so sorry for the poor lady that bought my one bed flat for over £80k more than I paid for it. Great for me, but certainly not her. Even taking into account further value increases, her mortgage would have been about the same as what I now have on a three bed house.

 

[St Rollox]

You also got the benefit of somewhere to live for 10 years. That is worth a lot more than #600

I wasn't exactly homeless to start with.
Would have had more benefit out of a timeshare in Benidorn.

 

[Clip]

Sadly, with the way house prices shot up (and are still creeping up), once you move out - the chances are you'll never be able to move back. That is unless you want to seriously downsize and eradicate any savings or equity you might have.

.

This is very true - me and me lass have talked about moving out many times as we would make an absolute killing on our house but neither of us fancise the extra commute or the last train home syndrome when out - at least we can still get a bus back from the centre of town.

 

[soil]

It really all depends on where you want to buy in London though - there are still some areas where you are able to pick up a bargain or two. And I have been telling anyone and everyone who is looking to buy that now is the time to invest in Woolwich/Plumstead/Abbey wood/Thamesmead way. Prices are slowly creeping up now because of crossrail but you can still pick up a 5 bed house for decent money

CLICK

'Invest'?

Surely most people are looking for somewhere to live rather than an investment?

 

[Xenophon PCDGS]

We obviously need more housing but there was a story in the paper the other day stating that we are building houses quicker than at anytime in the last 10 years, so the supply of materials is drying up thus pushing up the prices of that too.

Looking at certain areas, there now seems to be a realisation that building new houses on flood plains is not a good idea, as recent times in Britain have revealed.

Another side of the same coin sees the existing water supply in certain areas not being enough to serve vast new proposed housing developments. Many small rivers in certain areas have shrunk alarmingly in recent years due to over-abstraction according to some television and radio documentary programmes broadcast in recent years.

 

[SF-02]

Is it too expensive, is it just a problem in London or nationwide, will there be another property crash?

Yes it is too expensive nationwide if we look at income levels compared to house prices, and compare that to historical levels over the past 100 years and other developed nations.

Prices grew massively up to 2008. They stalled and fell in some areas, but governments have stepped in to prop up the market. As such we didn't have the correction other countries that also had bubbles have had. Now they are trying to extend prices further again for short term political gain but long term social and economic cost.

The argument that prices havn't risen since 2008 therefore it is ok to foment more increases is nonsense. Prices in 2008 were already way above historic norms. Not a good barometer to base policy upon.

Also over the past 30 years there has been decline in house building from 200k - 300k a year, to below 200k throughout the 90s and now down to just over 100k. Last year was the lowest since 1923, and even before the crash levels were very low. There are now a few big housebuilders who build at a very slow pace, and councils were banned from building. Private companies were supposed to step into the gap after the 1984 Housing Act but never did.

 

[Xenophon PCDGS]

It is far too expensive in London and the South East. The problem here is that there isn't enough houses and that there are many overseas buyers. It was reported recently that 85% of new builds in Greater London were bought by overseas buyers. They see the London property as an easy and relatively risk free investment.

As most of you know, I live in the "Cheshire Golden Triangle" in the rural part of Prestbury that abuts Mottram St Andrew. In this farming area, there are a number of very large properties of quite an age. Two of these are currently on the market for £7,500.000. The other parts of the Cheshire Golden Triangle, Wilmslow and Alderley Edge seem to be a magnet for professional footballers.

I feel that the standard of life is good in our area and comparable to the better areas of the Home Counties.

 

[SF-02]

It really all depends on where you want to buy in London though - there are still some areas where you are able to pick up a bargain or two. And I have been telling anyone and everyone who is looking to buy that now is the time to invest in Woolwich/Plumstead/Abbey wood/Thamesmead way. Prices are slowly creeping up now because of crossrail but you can still pick up a 5 bed house for decent money

One reason for the cheap places in Se London I think is that lots of people don't realise the extensive rail network south of the Thames & just look at the tube map for getting to work. Admittedly SE London is not as good as other areas of South London for rail, and the tube is often better, though crossrail will help SE London. Despite that those places you listed are currently only around 20 minutes from London Bridge & Canary Wharf so not too bad.
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The issue in London is foreign money. Many said prices were too high a decade ago, but they reckoned without foreign cash. As long as foreign cash continues to flood in prices can continue to rise and more foreign cash will continue to flood in.

It would take a global recession to end that.

Or a government that taxes it to a level that benefits it's own citizens. So not going to happen anytime soon.

With many press owners heavily into property investment, they would scream about it and claim it's marxism etc, ignoring that most other countries do exactly that.
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It's not difficult to check prices really.

A fairly non-descript suburb such as Surbiton (zone 6) will be much more than double the price.

Here's a small terrace sold for £225k in 2000, £480k in 2008 and then £560k in 2013:

http://www.rightmove.co.uk/house-pr...l?prop=26145897&sale=49412489&country=england

In many areas of the country you could get something similar for a quarter of the price, never mind half.

This is a council flat in a tower block located in an area with very high deprivation, unemployment and close to one of the world's most notorious prisons. It's an absolute f***ing hole and it's a quarter of a million quid:

http://www.rightmove.co.uk/house-pr...tml?prop=39840938&sale=491101&country=england

That is crazy when you can get a 1 bed flat for 100k in SE London zone 4.

 

[Clip]

'Invest'?

Surely most people are looking for somewhere to live rather than an investment?

yes, 'Invest'.

People may want somewhere to live but they are always going to want the value of their house to rise so they can either support their children when they are gone or move to a bigger house when they can.

Which is why it is better to 'invest' your time and money in somewhere that is going to rise in price.

We bought our house for that very reason its just we like it so much we dont want to move. Still 'Invested' our money into it.

 

[IanXC]

The long term problem in the UK housing market is supply, for probably 20 years we haven't built enough new homes to keep up with demand. Typically 100,000 are built per year, rather that the 200,000 that are needed.

That has happened principally because of the difficulty developers have acquiring sites, and obtaining planning permission. Theres much criticism of developers land banks, but they're a reaction to this very problem, the firms try to keep a reserve of sites so that they can continue building at a steady rate.

Right to buy is another issue - typically the receipts of the sale of 5 LA/HA properties are required to build 1 replacement. Its clear the overall stock of public sector owned homes will plummet in that circumstance!

Help to Buy for new build properties is widely seen as a good policy - yes it does perhaps "inflate" prices, but at the 20% support level the benefit of bringing a new property into the market that might not have been built otherwise heavily outweighs that, plus the spin off construction benefits.

The Help to Buy Mortgage Guarantee scheme (for any property) is going to do very little other than inflate prices in general.

 

[jon0844]

Looking at certain areas, there now seems to be a realisation that building new houses on flood plains is not a good idea, as recent times in Britain have revealed.

Another side of the same coin sees the existing water supply in certain areas not being enough to serve vast new proposed housing developments. Many small rivers in certain areas have shrunk alarmingly in recent years due to over-abstraction according to some television and radio documentary programmes broadcast in recent years.

Other things don't get upgraded either, like building new roads. Councils aren't entirely to blame for this, as central Government have long tried hard to do things to discourage things like car ownership by limiting parking spaces.. while new estate roads are so narrow any cars parking will cause problems. Of course, not having parking doesn't make people give up their car and use public transport (especially when new build areas don't automatically get bus routes, or certainly not a protected service that doesn't end after a few years).

How often do we see new railway stations built? Without these, and the public transport links to new estates, no wonder people have to keep their car.

After that we have the usual mistakes lot not anticipating demand for schools and hospitals, as young first time buyers move to a new area - then a year or two later start a family, with children growing up (all about the same time) and placing huge demand on existing services.

yes, 'Invest'.

People may want somewhere to live but they are always going to want the value of their house to rise so they can either support their children when they are gone or move to a bigger house when they can.

Which is why it is better to 'invest' your time and money in somewhere that is going to rise in price.

We bought our house for that very reason its just we like it so much we dont want to move. Still 'Invested' our money into it.

Increasing the value of your home is great if you plan to sell and leave the country, or plan to hand it down to your children (ideally before you have to go into care and sell up to pay for it, as things currently stand).

However, it's terrible if you want to move to a bigger house. The differentials are now massive, so to move up to more rooms or a detached home, or with more land, is now out of the reach of most people - even if you move a bit further out of a major city.

While, admittedly, few people would probably do it, if house prices were far lower, people would have significantly smaller mortgages and could invest the difference - or even just put it in a modest savings account or ISA.

In 1994, my one bed flat was £45k. A two bed was £52k. A house, in north London, was around the £100k mark or £90k if you ventured just outside the M25. My mortgage was less than I was paying in finance on a new car!

There's no way on earth that anyone today could seek to upgrade their property for price differences like that.

 

[soil]

yes, 'Invest'.

People may want somewhere to live but they are always going to want the value of their house to rise so they can either support their children when they are gone or move to a bigger house when they can.

Which is why it is better to 'invest' your time and money in somewhere that is going to rise in price.

Neither of that makes any sense.

My grandmother died earlier this year at the age of 100. My parents are 61 & 62. They own their house and have no particular need for the inheritance.

My parents will likely still be alive when I retire and so any inflation in the value of their house is going to be of little use to me.

So that's no help.

In terms of buying a bigger house, in 2000 a terrace in a given area might have cost £150k and a detached £300k. So if you bought the terrace and wanted to upgrade to the detached you needed £150k more.

Now in 2013 let's say both prices have doubled. Now your terrace is worth £300k - but the detached house is worth £600k. That's terrible news, instead of £150k you now need £300k to upgrade - twice as much. Even though you have made £150k profit you are actually worse off.

Of course you probably still feel smug, because you know someone who didn't buy the terrace in 2000 but instead rented for the duration. So you are better off than him, but much worse off than you would have been in 2000. So you feel richer even though you are not.

The only way you can benefit from house price inflation is you own multiple homes. Then it's a genuine investment.

BTW houses aren't really an investment. They are liabilities, however the land is really what you are speculating on. In America studies have shown that in the long run houses are not profitable. Why? Because they can build more relatively easily in most cases and so the price of houses is close to the cost of construction. (There are exceptions in places like San Francisco where there is literally no room to expand and prices rise as demand exceeds the limited supply.)

In the UK we have restrictive planning regulations which are designed to preserve our housing stock in an arbitrary 1950s timewarp despite mass immigration and smaller average household sizes since then. So land increases in price as a result. If you stop rationing land permits (planning permission) then prices don't increase. We have a lot of land suitable for building on, but laws prevent us building on it. A hectare of land with planning permission in say Cambridge is worth around £5 million. A hectare of land in the same area with only agricultural use rights is worth around £10k. You do the maths.

The real beneficiaries of this system are not homeowners but landowners. I.e. people who own hundreds of acres. It's a system designed to benefit the very rich. Not you and not me.

 

[jon0844]

I guess a lot of people who see property as an investment have every reason to want to stop house building.

I don't know exactly what to think about protecting green belt, and building ever smaller properties and flats in already crowded areas. Part of me thinks it would be better to spread out more into the countryside, with houses that are more spread out - so we can still retain greenery. Of course that spreads people out, which has an impact on transport, but I look around many towns and cities and feel shocked at how much is packed in - and what a terrible quality of living people must suffer (yet spending so much on).

And then we wonder why people get agitated and fall out with each other.

 

[Arglwydd Golau]

Another factor is the amount of empty properties (did I read somewhere that it is around 1 million?), second homes, and houses used as holiday lets....I was really surprised (don't know why, tho') last year when we went with some friends for a weekend in London and the property was an ex council flat. I wonder how many have been bought and then used in this way. As you might imagine, I was totally against the sale of council houses in the 1980's as that has contributed to the mess we're in now.

 

[maniacmartin]

There is still a lot of land that is not green belt in cities that we could make more use of which could be redeveloped, such as former industrial areas. We could also build taller buildings that can fit more people into a smaller footprint. I think that this is preferable to adding awful housing estates on the side of villages.

 

[Arglwydd Golau]

There is still a lot of land that is not green belt in cities that we could make more use of which could be redeveloped, such as former industrial areas. We could also build taller buildings that can fit more people into a smaller footprint. I think that this is preferable to adding awful housing estates on the side of villages.

I seem to recall that the last Labour Govt had promised to build on 'brown-field' sites but were subsequently scared off by the potential Health issues.....funny tho', didn't stop them building on flood plains, I was horrified to find a vast new housing estate built on land that I used to slosh through during cross-country at school ( for younger people that is not a referral to a well-known TOC but a form of exercise - or punishment - that was common when schools heavily promoted exercise)

 

[maniacmartin]

Cross country was a bit of a slog, just like its TOC namesake, but I liked it as you could get away from the staff and chat to your friends (and anything is better than contact sports....)

As for building on flood plains - a stupid idea what never should have seen the light of day.

 

[SF-02]

The UK is too precious about much of the green belt, but we can do far better on brownfield sites. UK cities have some of the lowest densities of inner city housing of any EU or developed nation. This is a legacy of post war slum clearances, zoning, and moving people to new towns, and incredibly slow development. inner city living can help to reduce the strain on transport networks and commuting, and the obvious quality of living benefits that brings.

High density needn't be ugly - indeed the high rise estates were actually lower densities than low rise victorian terraces due to much 'dead' green land at their base. The highest densities in London are Mayfair, Chelsea etc. The density of central Paris is above most UK cities.

In terms of property size - the UK is atrocious with the lowest average by far. Again, this is due to removing regulations and leaving it to the 'market'. I recall reading an in depth report in which not only was the every EU nation above the UK, but so was Japan by quite a long way! In the 80s under various housing acts the 'parker morris' regulations (minimum room size, window size etc) were removed and small boxes with little natural light took hold. Thankfully regulations have been adopted again in recent years and size has increased, though it varies quite a bit and some way to go.

Another issue is that when marketing a property in the USA & EU total property size is listed by law in square metres or feet to show clearly the size. The UK does not do this.

 

[Clip]

<snip>

The real beneficiaries of this system are not homeowners but landowners. I.e. people who own hundreds of acres. It's a system designed to benefit the very rich. Not you and not me.

Funny how if I sold my house tomorrow then that I would end up being a far wealthier man then I am now.

<Snip>
I guess a lot of people who see property as an investment have every reason to want to stop house building.

Im all for housebuilding - and lots of it as there isnt enough. As are a hell of a lot of people so I am unsure why you would say such a thing.

 

[Oswyntail]

... and what a terrible quality of living people must suffer (yet spending so much on)...

This is another factor, of course, what people think of as acceptable. There is some pretty high-density housing around Victoria in London, but, because it is "chic" it is desirable.Think of apartments in Paris or New York - efficient use of space, that seems to be ruled out here.

 

[soil]

Funny how if I sold my house tomorrow then that I would end up being a far wealthier man then I am now.

If you sold your house tomorrow, your wealth wouldn't change.


If I have £500k cash and a house worth £500k them my wealth is £1m.

If I have £1m house and no cash my wealth is still £1m.

If I have £1m cash and no house my wealth is still £1m.

Also if you sold your house tomorrow you'd have nowhere to live.

So presumably you won't sell your house, so the value of it isn't of much relevance to your life.

 

[maniacmartin]

This is another factor, of course, what people think of as acceptable. There is some pretty high-density housing around Victoria in London, but, because it is "chic" it is desirable.Think of apartments in Paris or New York - efficient use of space, that seems to be ruled out here.

Indeed. We can fit a lots of big apartments flats on the same sized piece of land we can only fit a few small houses. It's a bit harder in the UK though as our streets are narrower, so to build buildings that are very tall on existing streets could cause a loss of natural light on the lower floors and the street.

There's also a problem in that lots of brits love to drive everywhere and need somewhere to store their cars. Not so much of a problem in a city I admit, but I still miss having a garage to store bicycles and junk in. You're less likely to get that with flats.

 

[Drsatan]

Having read this thread, I believe buy to let ought to be reigned in considerably to ensure that first time buyers can get a foothold on the ladder. This is true of new housing estates, where from what I've read it's not uncommon for buy to let landlords to snap up most of the properties, leaving few (if any) available for first time buyers. Indeed, in London, around one in three properties on the market are purchase by buy to let investors (link)

Given that more of us have to rent due to the rise in house prices, especially in London, we expect to be able to rent properties that at the bare minimum comply with the government's Decent Homes standard. Unfortunately, in the South West of England, around half of renters live in houses that don't match this standard, and if you do further research you will find tales of landlords who fail to maintain their properties, and/or harass their tenants, yet go unchallenged. Not to mention letting agencies have carte blanche to rip you off at every opportunity due to lack of regulation.

I get the impression that Britain is moving to a society where renting is becoming more common, but regulations aren't keeping up with this to ensure tenants aren't screwed over.