LondonMix

From your list I'd definitely choose Hither Green-- particularly the side closer to Lee. It's a bit dull but its walking distance to Blackheath. Also, there are transportation changes upcoming with Thameslink. Charlton is okay-- I've got friends who live there. As others have said, Beckhenham is very nice and not much further than Anerly.

Sorry, Blackcurrent, I mean why haven't your friends sold if that was always their intention? Why would they continue to be accidental landlords subject to interest increases in this situation. JohnL-- sorry to hear that. New builds outside of central London at times appear to have lagged behind the market.

Wasn't part of the idea though to divert commuters away from Victoria? That might have been part of the rationale for not doing the connection.

House prices in London are now well above their previous peak. The people you know in that position are still in negative equity? Also, rents have risen in London to boot.

I think you just need permission from the owner of the building. My guess is the Patch has given consent. I like the street art we've got in general but I think this one isn't good. Fatuous was the perfect description.

Those asserting that there is a tit for tat relationship between current interest rates and house prices are forgetting one key point. House prices in general are affected by people?s long term (not short term) interest rate expectations. This should be obvious unless you think EDF users are the only people in the country cognizant of the fact that rates will rise. So yes, a fall in mortgage rates from a norm of 15% a generation ago to a norm of circa 5-6% now corresponds to a dramatic change in house prices (though not affordability necessarily). There is no evidence that people?s long term interest rate expectations have changed as a result of the current 0.5% BoE rate. In many parts of the country outside of London, low interest rates have led to no increase in house prices and other parts, house prices are still in decline. Again, I?m not arguing that house prices will be resilient because I have no idea. The only reason I?m saying anything is one of my friends is really nervous about buying because they keep hearing people say things like ?it?s so obvious this is a bubble and everyone buying now is going to lose all their money?. It terrifies them as it?s taken them years to save a deposit and they don?t want to make a huge mistake and end up trapped in negative equity in a house they can?t ever move on from. However, what is going to happen in the London housing market isn?t obvious at all one way or another. Interest rates are only one of many key drivers including investment from abroad, house building (which is woefully inadequate to keep up with population and jobs growth), demographic trends (families increasingly choosing to stay in London / older people living longer / increases in the birth rate / immigration) and economic growth to name a few. If you can afford the home you are looking to buy comfortably when interest rates do rise, there really isn?t anything else to think about. Just be prepared to weather any storms and choose some place you could hopefully live in for 5-10 years if you had to. Over that period of time you?ll have amortized enough of your mortgage to have equity even with a dramatic decline in prices and the upshot is that your next step up the ladder will be easier than would otherwise be the case :)

Yes but the extra dosh the first time buyers have will result in these "climbing up the ladder folks" to sell for more which in turn will lead to them pushing up prices further up the housing food chain so to speak. Blackcurrant Wrote: ------------------------------------------------------- > Loz Wrote: > -------------------------------------------------- > ----- > > My understanding is you need to have at least a > 5% > > deposit, not a max of 5%. > > You're probably right, but anyone with a deposit > of 20% or more, which includes most people trading > up, can already access cheap mortgages so help to > buy won't make any difference to them. Only first > time buyers with little cash will be likely to use > the scheme.

Exactly Quids :). It's okay to have a natter about this but if anyone tells you they know exactly what's happening in the London market just smile and nod. London has one of the most complex residential markets in the world. It's international both in terms of renters (who rarely buy) and owners (who don't necessarily live here). Add to this social housing policy and planning laws as well as interest rate policy and government schemes like Help to Buy and its extremely complicated. Normal statistical analysis regarding earnings and house prices isn't easy to interpret because circa 30% of people who live in London (and largely work here too) are in social housing. Their incomes are included in the averages but the lower value of their housing is not. Also, a lot of middle income workers in London live in the home counties. The only way to even get to grips with affordability would be to look not at average incomes but the incomes of those who live and work in London and buy / rent in the private sector. You'd also need to exclude housing purchased by wealthy foreigners who don't earn income in London but can pay loads for flats and houses. Its a mess to understand. Unless its your business to speculate in real estate your just better off buying a house you can afford and that you wouldn't mind living in for 5-10 years if you had to. The only thing I think I know for sure is that we need more housing in London and more growth in jobs outside of London to make the situation better.

Roughly speaking, it would suggest that banks don??t think LIBOR on average will be greater than 3.5% over the next 30 years. Without going into all of the intricacies of how the monetary system works, there is a need for banks to borrow money on a short time basis as part of ordinary banking operations. The Bank of England??s base rate is the rate at which the Bank of England lends to banks overnight in exchange for collateral (ie. Secured lending)?Xthe bank deposits collateral with the BofE (usually a government bond) in exchange for cash and the bank gets the collateral back when it repays the loan. LIBOR is the rate at which banks lend to each other for 3 or 6 months without any security backing the loan (more akin to a credit card / IOU). Because both the term is longer and there is no security behind the lending, the LIBOR rate is usually higher than the Bank of England base rate. So normally you would assume that the Bank of England base rate will be below the future LIBOR rate. On top of the Bank of England Base rate, banks will decide how much to charge as a margin for residential mortgages based on how they asses their risks / profits. However, one of the many reasons we have anti-competition laws is so that banks have to compete against each other when setting margins to ensure a ??market rate?? that should be reasonable. Hence why occasionally you seen banks having to do sell offs when their market share becomes too large etc. I can??t stress enough though how inaccurate swap rates are regarding estimating what the future will actually be. It??s really just the market??s (i.e. the amalgamation of thousands of informed yet fallible views from people who work with these rates) estimate today of what rates will be in future. There are a thousand and one political and economic factors that can and will change the analysis regularly. In the 70s, no one in the market would have predicted that the political decision to make the central bank independent would have dramatically decreased inflation and interest rates in the 90s and 2000s. The short answer to your question was yes but I wanted anyone reading to slog through all of that so the take away is you never know what could happen so always assume a reasonable buffer when working out your finances ?? Mick Mac Wrote: ------------------------------------------------------- > LondonMix Wrote: > -------------------------------------------------- > ----- > > Libor is the interbank lending rate which > changes > > daily. The Libor swap rate makes a forward > > assumption about what the Libor rate will be on > > average over a given period and locks it in > > through a financial instrument-- usually > > commercial mortgages are swapped (or fixed) so > > borrowers have certainty over the interest > they'll > > be charged. > > Thanks LM. And do the current long term 30 year > swap rates at 3.5% max tell us anything about waht > banks think about future rate movements on the > long term or not?

Libor is the interbank lending rate which changes daily. The Libor swap rate makes a forward assumption about what the Libor rate will be on average over a given period and locks it in through a financial instrument-- usually commercial mortgages are swapped (or fixed) so borrowers have certainty over the interest they'll be charged. While lenders charge a margin on top of Libor for loans, lenders profits are something entirely different their profit is their total revenue less their costs which include processing and admin / staff etc etc loan write-offs etc. Residential mortgages are often quoted in reference to the Bank of England base rate which is different to Libor (though Libor is influenced by it). That is expected to rise from 0.5% particularly if inflation picks up or the economy / employment figures improve.

And you can do that without maxing out what the bank will lend you... My friends mortgage will be less than their current rent. Even with mortgage rates of 5%, that would still be 1,300 GBP a month. A couple pulling in 4k a month can easily handle that.

You can buy a small house on that income with that deposit down the road in Catford. I know as I have friends looking in the price bracket. They are also looking in Eltham where for that money you could buy a house with a nice garden, near a good school and close to the station. Does no one else in ED have friends that make those incomes. Where on earth do you think ordinary people live? http://www.rightmove.co.uk/property-for-sale/property-43596857.html?premiumA=true StraferJack Wrote: ------------------------------------------------------- > "That's because your ?40k salary is competing with > two salary couples." > > not in the scenario outlined it wasn't > > But let's take that two salary couple - what joint > income do you want to give them? 80k? > > 3.5 times 50 k = 175k + second income of 30k = > 205k > > That's not buying much. Even in Norwood > > But let's say they have savings of 50k and buy > what - a 2 bed flat with that cash? > > What is next step for them? If they are young they > have career progression but unlikely many people > would earn money faster than house prices rising? > Plus maybe they start a family and earnings dip. > Interest rates go up and their outgoings explode > > I just can't see the progression that people used > to be able to do

Loz that's because you aren't buying a flat. If there was something better whoever bought it could get for 450k, they would buy it. Better of course being subjective regarding area etc...

Not true-- food prices and other commodities do go up often and with real consequences in the developing world. Demand and supply are always at work. The difference is that its easier to increase the supply of food for various reasons in repsonse to a spike in demand (and hence prices and profits that incentivise this action). For housing, planning laws have a significant role to play. Why aren't enough houses in London being built? That's the question that needs to be asked. StraferJack Wrote: > > markets operate to keep the cost of food down. But > they are operating to push house prices up and up > (with a customer base that has extremely polarised > opinion of wether that is a good or bad thing). So > you can't compare the two

Exactly-- London has more social housing than the country in general as a percentage of the housing stock. However, with London creating more jobs than other regions, the demand to live in London by those who can't afford market prices is likely to outstrip supply. Anyway, the real solution is to make other parts of the country more desireable by increasing economic vitality and job creation, particularly up north. That and building more houses. Everything else is just tinkering at the edges and ignoring the fundamental issue. Loz Wrote: ------------------------------------------------------- > "rent controls existed in this country before and > in many others - it's not science fiction to > suggest them " > > I'd rather see more social/council housing built. > But I can never see enough being built in London - > there are too many people wanting to live here.

Yes, yes it is. You might not want it to be and there are alternatives to this model-- ie all housing could be owned by the government and if there was excess demand, you could join a list. But the current model is a business for better or worse. People can and do lose money and there are real investment and business risk attached. That's not to say there might not be a better way to do it though!

I don't rent out but agree that anyone buying today doesn't make much- break even after tax given yields are often below 6%. The idea that rents should be based on the price the landlord bought the house for doesn't make sesne. And if the house loses value / market rents go down should tenants be forced to pay higher than market rents so the landlord doesn't lose money? Its a business. There should be laws dictating how landlords can treat tenants so they aren't exploited but the only fair rent is a rent that the landlord is willing to accept and the tenant is willing to pay. Super prime rents in London this year have actually fallen 2.7%. http://www.propertywire.com/news/europe/london-prime-rental-index-201308278162.html

I like it too-- I have friends there and its really nice and well connected for zone 5. If I were leaving ED, that's probably where I'd go as its also got good secondaries. Plus its only 15 min in the car from ED. giggirl Wrote: ------------------------------------------------------- > Nothing wrong with Beckenham - it's not a bad > place to raise kids.

Agree that's the better option. I think that's what a lot of people are doing though... I know a few people who are buying at the moment (that stage of life) and no one is pushing themselves to the max. Your max and someone elses might be totally different. One of my friends is moving from ED to Forest Hill for the reason you said. However, I'm sure the locals of SE23 think she's mad to pay the current prices and she's breaking her back to afford to live there... It's all relative. Jeremy Wrote: ------------------------------------------------------- > Or smaller house in Sydenham (or wherever), and > keep the rest of the cash. > > Maybe a good option to stretching yourself to the > max and spending all your money on your house. > Save 300-400K and retire earlier.

Fair enough Otta on big house in Sydenham. Most roads these days seem to lead to Beckenham if the family room is anything to go by. I'm sure all the locals Tthere moan about the ED unflux as voraciously as residents here complain about the influx from other parts of London :) Edited for clarity

This was my point-- prices in ED skyrocketed well before help to buy so trying to explain it that way doesn't make sense. Moreover, for purchases at these price levels banks require a hefty deposit (usually at least 15%). If you look at the trend, despite house price increases in London the ratio of earnings to house prices in the capital fell last year so the idea that people are pushing themselves more and more isn't necessarily the case. I'm not saying that the market won't crash, I'm just saying it's a lot more complicated than people make out and its difficult to know what will happen. StraferJack Wrote: ------------------------------------------------------- > when this housing crash comes it's going to be > messy > > The demand might be outsripping supply at the > moment but that demand is leveraged beyond > breaking point from the get go - when those > interest rates go up again...

I just sold and bought in the area in the last 6 months and it is mental. I know very well what everyone is going through and we were fortunate enough to make enough money in our last place to afford to move up the ladder here-- also since we first moved to the area our incomes have gone up quite a bit. My point was that people trying to figure out what's going on and suggesting that it will all come tumbling down are painting an overly simplistic picture of what's happening both in London and locally. Out of curiosity Otta-- if you had 800k that you could only spend on a house, where would you spend it? Bigger place further out? Flat closer in?

Couldn't agree more. DaveR Wrote: ------------------------------------------------------- > "Perhaps, as some posters suggest, we should move > to somewhere cheaper. Honestly,I'm not sure where > that is or where we could move such that our rent > doesn't swallow the vast majority or our income. > Way beyond London and out of reach of the work I > now do." > > Obviously I don't know your particular > circumstances, but almost anywhere with an SE > postcode is now cheaper than SE22, and you don't > have to go far (Forest Hill, Sydenham) to see > that. Don't get me wrong, I have a lot of > sympathy with people who have put down roots in a > particular area and then find that they can't > afford to stay. But it is worth busting two myths > that still get a lot of currency here: > > (i) SE22 is an ordinary place that is or should be > cheap to live in > > (ii) everywhere is London is as or more expensive > than SE22 > > Also, IMHO, blaming landlords and/or the > government is pointless and wrong. If the returns > on residential rentals are good then people will > invest, and if it's not small landlords it will be > big corporate landlords. And everybody says > 'build more houses' but they mean 'build more > houses somewhere else' - governments know this.

The interest rates on help to buy mortgages are very, very high already. I don't agree with the help to buy scheme but I think the London property market is harder to understand than a lot of people think. The perception that people are massively stretching themselves I think is a myth. The market in this part of London has moved more than London as a whole which is telling. This has happened before help to buy / ultra-low deposits were available and most mortgages above 500k (which is what you need to buy a house that is 750k+) require a 15% to 20% deposit. Moreover, between 2011 and 2012 the price to earnings ratio in London actually fell despite a 7% increase in prices in London! London has one of the most complicated housing markets in the world due to a mix of shortage of supply, foreign buyers, the very active buy to let market and a large social housing sector. http://data.london.gov.uk/datastore/package/ratio-house-prices-earnings-borough Like Mick Mack, my first place was a step down (ED back then wasn't exactly an upmarket move). You just buy where you can comfortably afford and see where the chips fall. Trying to predict what will happen in the market is impossible.

But do you remember what it was like? My partner lived here in the 90s and you can't really compare it. Whether you preferred it before or now is a different question but the place has changed as have the rents. There are still cheaper places in London to live.