When do I sell my London pad?

[doodab]

Nonsense, all.
Depends on your age. There are plenty of people in their 30s/40s/50s who bought in London in the 80s/90s/early 00s and rode the property market upwards. So their salaries are kind of irrelevant, they can use their existing high-valued property which is wholly or mostly paid off as deposits to move into more expensive properties while keeping to a realistic mortgage level. This is particularly true for couples who each bought a property when it was cheap and merged their assets.

Further out yes, but not in parts of zone 1 where a family house is several millions and going up by 2 million quid a year they can't. I know people who bought properties in these areas (flats, not family houses) and they aren't able to move up the ladder without moving outwards. And I'm not talking about contractors but bankers, marketing directors of FTSE companies etc, some pretty well to do people are basically priced out of central london. It's a different ballgame.

[OwlHoot]

The push over the past 20 years or so was to mortgage yourself to the hilt, borrow as much as you could for your first property, re-mortgage to get as much cash out as possible when you can and rely on rising prices to cover you. These people are unlikely to have large amounts of equity sitting around.

Also, prices in central London (or anywhere I suppose, come to that) don't rise like a linear conveyor belt across the price range. They include a non-linear "tidal" effect where the more expensive properties rise proportionately more. So even if one already has a modest property, say one or two bedroom flat, rising prices can open an insurmountable price gap between that and the next step up.

[sasguru]

You appear to have missed the part in the initial post that you quoted saying people in their twenties.
For people in their 30s? It would be a push to say that the starter home they may have been able to afford 10 years ago will have risen enough, and they will have paid off enough on their mortgage, to allow them to trade up.
40s and above may be better, but I doubt it on the whole. The push over the past 20 years or so was to mortgage yourself to the hilt, borrow as much as you could for your first property, re-mortgage to get as much cash out as possible when you can and rely on rising prices to cover you. These people are unlikely to have large amounts of equity sitting around.

Fair enough about people in their 20s, they're fooked.
People over 40 though, I'm guessing there might be plenty of people like me since I'm not that special and I am mortgage free with property worth quite a bit.

[doodab]

Fair enough about people in their 20s, they're fooked.
People over 40 though, I'm guessing there might be plenty of people like me since I'm not that special and I am mortgage free with property worth quite a bit.

I doubt you can stretch to a family house in zone 1 for 4.5 million quid though. Fair play to you if you can.

[fullyautomatix]

I doubt you can stretch to a family house in zone 1 for 4.5 million quid though. Fair play to you if you can.

I doubt he can. He will claim that he can but I think we all know the truth.

[sasguru]

I doubt you can stretch to a family house in zone 1 for 4.5 million quid though. Fair play to you if you can.

I doubt he can. He will claim that he can but I think we all know the truth.

No I'm stuck at the 1.5 mill mark without mortgage, 2 mill max if we borrowed.
That actually doesn't buy you much in Zone 1, you're right.

[sloverid]

Sorry for the late response. Not very social behaviour from the Op know.

There are some good points here and it's a bit of a dilemma. Obviously you can't really trust what the estate agents say but they told me that at the moment they've got a database full of people waiting for properties to come on the market and they do the open house 2 hour viewings and can get up to 40 people viewing. Give or take a pinch of salt. They also mentioned it's mostly European buyers at the moment and I suspect they are the Uber rich sort without mortgages.

It just find it difficult to believe that this can be sustained for too much longer without something happening and if I can make 300-400k after 3 years that's not too shabby. Might put it on the market next Jan.

[SueEllen]

Sorry for the late response. Not very social behaviour from the Op know.

There are some good points here and it's a bit of a dilemma. Obviously you can't really trust what the estate agents say but they told me that at the moment they've got a database full of people waiting for properties to come on the market and they do the open house 2 hour viewings and can get up to 40 people viewing. Give or take a pinch of salt. They also mentioned it's mostly European buyers at the moment and I suspect they are the Uber rich sort without mortgages.

It just find it difficult to believe that this can be sustained for too much longer without something happening and if I can make 300-400k after 3 years that's not too shabby. Might put it on the market next Jan.

There is a shortage of rental accommodation now and if the bubble bursts it won't increase the number of available rental properties as "normal" people won't be able to get mortgages. So if I was you I would try and keep your flat as a BTL for as long as possible.

[edison]

Sorry for the late response. Not very social behaviour from the Op know.

There are some good points here and it's a bit of a dilemma. Obviously you can't really trust what the estate agents say but they told me that at the moment they've got a database full of people waiting for properties to come on the market and they do the open house 2 hour viewings and can get up to 40 people viewing. Give or take a pinch of salt. They also mentioned it's mostly European buyers at the moment and I suspect they are the Uber rich sort without mortgages.

It just find it difficult to believe that this can be sustained for too much longer without something happening and if I can make 300-400k after 3 years that's not too shabby. Might put it on the market next Jan.

Where in zone 1 are you? Even within zone 1 there are significant variances in the rate of increase.

I would say it is a bubble. How sustainable it is one can only guess.

As an illustration, I used to own a two bed ex-council flat in SW1 (traditionally the most desirable postcode in London) and sold it in 2005 for a large profit (or so I thought.) Its value continued to rise another 20-30% odd until around 2008/9 then levelled off during the financial crisis. I checked yesterday and similar ex-council flats in a less desirable part of SW1 are on the market at over £500k. For an ex-council flat. Madness.

Having said that, the mania is not limited to London it seems. I live in a desirable small town about 25 miles out of London. Our local primary school is absolutely outstanding and keeps prices high. I get a regular stream of notes from prospective buyers asking if I would sell my house. I spoke to one couple desperately looking and they told me they had seen a small house in my town (nice but nothing special) that had 37 viewings and several offers over the asking price.

Surely this can't be sustainable?

But then I said that in 2005!

[Halo Jones]

the only thing that's certain is that no one really has a clue what's going to happen.

WHS