General Chat

I am intrigued at the cost of living in and around London. Why is property, to rent or to buy so much more expensive ? Are salaries much higher ? if so, why?

I like David live in the North East and I know my children and grandchildren could never afford to move south

Moving from the south-east to the south-west 25 years ago, I found myself in 'the lap of luxury' as far as housing costs were concerned.

Gradually, regional annual pay increases were nowhere comparable to London & thus, spending power had to be adjusted accordingly.

No regrets about the relocation nevertheless. The 'pluses' still outweighed the 'minuses'.

Rollo could probably give you a whole list of reasons.

There are a number of factors effecting property prices, one is supply & demand. There aren’t enough homes where people want to live, with little available space to build more.

London wages/salaries, particularly in the last 50 years, have always been higher than the rest of the country. Many job vacancies still advertise a basic salary plus Inner or Outer London Weighting. That’s to cover the higher housing costs, or commute.

International companies, even if they don’t really need to be there, love to have London as their main registered address or branch office. New York, Paris & Salford doesn’t have quite the same ring!

There is no longer any kind of logical relationship between pay and house prices in central London while rental prices can be ok for sharers and dinkys but way beyond what most with kids can afford. Hence the millions swarming into London with their commute five days a week.

The commute is not a whole lot better in other big cities but the house prices tend to be vaguely affordable.

Once upon a time central London used to mean within the circile line but now it extends to the wilds of Pimlico and Fulham, Hoxton, Islington and even south of the river!

I certainly could not afford to buy the house I live in!

Spending power in Greater London is far higher than the rest of the UK. Greater London has about 25% of the UK population but 40% of the spending power. The poorest part of England is Cornwall followed by the Isle of Wight. If East Kent was a county you could add it to the list. Schooling, regardless of income, is of a much better standard in London than anywhere else in the country.

There are only a handful of places like London even Paris feels distinctly 2nd division by comparison. After London there is New York (New York), Hong Kong and nowhere much else. Berlin is very much on the up though.

I couldn't afford to live there and I'm too old to move. My bungalow's value would be doubled in it were in London......can't say I understand that.

Property value's show the difference between value and worth
Do people earn more in London doing the same job?

Do people earn more in London doing the same job?

It depends. There are probably the same percentage per population earning minimum wage as in other areas. On the other hand, civil servants, NHS staff, Teachers or other public sector employees would probably earn more.
I know that we suggested our daughter moved up north when she was home hunting. She said that her NHS job would be less than she was earning then.

You also have to consider the salaries and annual bonuses for those in the financial sector, some of which are obscene. They will raise the average.

Some contractors I used to work with live in Newcastle and found it cheaper to stay in digs down here and go home (drive) weekends than to buy a house here.

ZZzz - There used to be a lot of high-tec industry in the Newbury/Reading/Oxford triangle. High wages = push up the cost of housing.

There's also the UK equivalent of Silicon Valley along the M25 corridor.

They're no wealthier, just talk different.

Even 55 years ago, teachers in London got an additional amount over the basic, to cover the cost of living.

so it is nothing new.

The growth of financial sector businesses and their relocation/start up in London pushed up prices enormously in the late 1970s and early1980s.

Overpaid traders needing to spend huge sums of money to prove they were important. Demand drove luxury goods retailers to 'branch out' in London.

When I bought my first house aged 18 one of my brothers told me "no matter how expensive it seems to buy a house and have a mortgage, it's cheap money".

London in the 1960s had International businesses spread not only just in the City but further out too. The concentration of companies on dedicated new build super sites meant commuters were heading towards fewer areas within Inner and Greater London.

It was cheaper for me to commute from Bishops Stortford and even Great Chesterford into the centre of London than to continue renting a flat close to work used during the week.

Of course I should have bought a London property but I didn't. With hindsight that was plain daft.

We don't talk different, David, we talk proper. It is everyone else what talks different.

LOL so many dialects, so many more slangs, but right is proper (?)

In the longer term house prices have been pushed up by the trend for more women to work soon after having children instead of remaining a full-time housewife.
That increased income meant the couple could borrow more and so pay more for property.
The mortgage lenders have also steadily increased the multiple of earnings they will lend.
And low interest rates have also enabled higher borrowing.
Increased population has driven up demand.

All upward pressures, none downward.

I'm sure cave dwellers had their own sort of housing & mortgage problems especially when they wanted to upgrade.

Cave cladding was all the rage!

BrianW comments are accurate for most of the UK but not central London or some highly desirable locations such as the Cornish and Norfolk coats.

In Central London property is often seen as a convenient store of value and any long term rental contract actual reduces the valuation by quite a bit. The result is a sig proportion of prime res property remains uninhabited year in year out. The same thing happens in the Cotswolds, Cornish coast etc but not to the same extent.

It is far hader to change this than J Corbyn thinks.

An important factor which has allowed lenders to increase mortgage multiples has been the ease with which they can raise wholesale mortgage finance abroad. If brexit grinds on as it is doing this source of funds will tend to dry up locking out the millenials even more.

Few people read all the fine print on their mortgage agreement. A clause most won't be aware of is that if the retail lender fails to make payments to whoever they secured the wholesale finance from then the debt will have to be paid by the home owner, all of it on the button. Cannot happen? It is just such a situation which kicked off the US Housing blitz ten years ago followed by a financial crsis which nearly saw the sky fall in.

Then there is the out of control situation in private personal leases for cars...

I recall property being of such high cost in the capital that some land-lords exploited it to charge exorbitant rents in poor conditions.

I'd ignored the "Buy new and leave empty" brigade which I an given to understand is is mainly overseas investors.
Having worked in Fitzrovia for many years I concluded that the residents were either very rich in expensive properties or very poor in social housing.
Nobody in the middle income bracket.

My first family home was in Hounslow. When my sister was 6 months old in 1986 we moved from a three bed end terrace in Hounslow, Middlesex to a four bed detached in Hook, Hampshire. My parents knew the move long term would price them out of the London market. They also felt though it would be a healthier place to raise a family.

My father worked in finance and so Hook was not to last. My father worked closely with the Oil industry in Aberdeen and so was offered a move to Edinburgh on his London salary which he took.

At the time Edinburgh house prices were relatively depressed so our next house was considerably larger. Now Edinburgh is one of the big financial centres in Europe and whilst house prices are lower than London they too are now pricing most people out of the market.

To put it in prospective my in laws sold their home which is 18 miles outside Edinburgh detached 3 bed, 3 bathroom, 2 sitting rooms, kitchen, dining room and garage for £190'000. The same property in Edinburgh would cost somewhere between £450'000-£500'000.