Following the Guardian’s article ‘Record proportions of Londoners selling up to move up North’ I discss how Spiralling prices make it unaffordable to live in London, so it really does makes sense that people are looking at cheaper alternatives.
If you hadn’t noticed, property in London is ridiculously expensive. So the news that record proportions of Londoners selling up to move north comes as no shock.
Jumping up the ladder in London is becoming tougher and tougher. For example, if I wanted to move from the 1 bed I’m in now… which was worth £370k when we moved in (June 2014), we would be looking at £645,000 for a 2 bed in the same building. If we want the penthouse then that’s £1,370,000.
This is crazy money with even crazier mortgages. If I had a property at over £600,000 our mortgage payments would be over £3,000 per month. It’s not worth the crippling anxiety to try and meet that every month, plus the service charge, utilities, car parking, food, transport… the list goes on.
Then you take the normal every day spending. £3 for a cup of coffee. A stop at the Waitrose Local (because that’s the closest shop) will probably be a minimum of £10… don’t even mention popping out to the local for a glass of wine or pint of beer… money adds up quickly.
So now, this flat is worth £465,000, it’s being sold. There is no investment value in keeping it. Regardless of whether I’ll look back in 20 year’s time at the inevitable increase in value, it’s just not money savvy and it definitely isn’t an ‘asset’.
Any rental income won’t cover the mortgage and it definitely won’t extend to service charge payments. Even if it were to go up in value, rents don’t increase as quickly as property prices in the capital so it would be tough affording it.
Rather, I’m opting for the £100k cash and will invest the money in the west country or the north (as of writing this blog I haven’t started searching). I still have another flat in London which is doing well… but I brought it in 2011 and has a lower mortgage so it still has good earning potential.
Cheaper house prices, more space, equal or better schools, quick transport links, similar amenities are what is driving Londoners out. It’s no longer viable to be here. Couple that with the fact that the majority of the London population moved into the city looking for jobs so appreciate that it’s so much cheaper outside the city bubble and are drawn back by friends and family.
The rise of flexible working means that you can work from just about anywhere. There’s no need to be rooted in one spot. Again, why pay ridiculous costs to live in London. When you can earn the same and live in a more affordable place.
I can see this having a knock on effect for the rental market. As the London property market becomes less of a good investment, twinned with rising tax. Investors will sell up for cheaper alternatives with better yields in the Midlands and the North. Reducing supply and increasing demand. The Government were hoping to stabilise rents, but that won’t happen if there are multiple households fighting for one property.
It’s a minefield, but a prime example of the housing bubble rising to far. When not even those people who work in London on ‘London wages’ can afford London. It’s time for a recalibration. Regardless of BREXIT, house prices are about to change and probably not for the better.
Now that London prices are at an all time high comment below. Would you stay put or sell up?
Natasha
P.S If you want to learn how to build a property portfolio from £0, head over to my Property Investment Mastery Facebook Group and join the 30 Day Cash Flow Challenge.
