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Who on earth is buying London property? Watch

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    I have curiously been looking at London property on the help to buy websites and I find it just so ridiculous that to get a property in London you are looking at minimum of 500k.

    It's fair enough that you can potentially buy a share through the various schemes, e.g. 25% share of 125k, but on top of that you need to rent the other share, which is typically around £500-800 in rent per calendar month.

    So my question is, who is actually buying these properties?

    It seems to me that this is a market that has been shored up by foreign investors. The question is, if we see a global recession in the next 2 or so years what will happen? My friend from China seems to think there's a time bomb in china ticking away and that a recession is inevitable. A lot of people who have invested in London property are from China. If things go wrong there then it will have a dominoe effect. Are we likely to see a crash in London?
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    (Original post by Fruli)
    I have curiously been looking at London property on the help to buy websites and I find it just so ridiculous that to get a property in London you are looking at minimum of 500k.

    It's fair enough that you can potentially buy a share through the various schemes, e.g. 25% share of 125k, but on top of that you need to rent the other share, which is typically around £500-800 in rent per calendar month.

    So my question is, who is actually buying these properties?

    It seems to me that this is a market that has been shored up by foreign investors. The question is, if we see a global recession in the next 2 or so years what will happen? My friend from China seems to think there's a time bomb in china ticking away and that a recession is inevitable. A lot of people who have invested in London property are from China. If things go wrong there then it will have a dominoe effect. Are we likely to see a crash in London?
    On your last point, will there be a crash, I think that has to be on the cards. A combination of a bad Brexit deal (which, insanely, seems to be the preferred option of the Tory Party), high consumer debt and flagging UK growth, all point to a major correction in asset prices, that will probably affect both the stock market and London property. There is already a sharp drop in prices at the very top end of the London market over the last year or so. This is down, as you say, to a reduction in the investment prospects for London property to overseas buyers as speculative purchases. To what extent that will filter down to the lower parts of the market remains to be seen. Prices are currently stagnant or falling slightly in London and still rising elsewhere, but it's likely that the effect will reach most properties over the next couple of years.

    On your first question, who is buying, well, apart from the foreigners always entering the market in London, the basic answer is the children and grandchildren of people who already own London property. A combination of subsidised mortgage deposits and payments, loans on existing properties and the effects of inheritance. Very few people outside London can easily drop sticks and move into London, but plenty of people in London property already can borrow against it for example.
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    (Original post by Fullofsurprises)
    On your last point, will there be a crash, I think that has to be on the cards. A combination of a bad Brexit deal (which, insanely, seems to be the preferred option of the Tory Party), high consumer debt and flagging UK growth, all point to a major correction in asset prices, that will probably affect both the stock market and London property. There is already a sharp drop in prices at the very top end of the London market over the last year or so. This is down, as you say, to a reduction in the investment prospects for London property to overseas buyers as speculative purchases. To what extent that will filter down to the lower parts of the market remains to be seen. Prices are currently stagnant or falling slightly in London and still rising elsewhere, but it's likely that the effect will reach most properties over the next couple of years.

    On your first question, who is buying, well, apart from the foreigners always entering the market in London, the basic answer is the children and grandchildren of people who already own London property. A combination of subsidised mortgage deposits and payments, loans on existing properties and the effects of inheritance. Very few people outside London can easily drop sticks and move into London, but plenty of people in London property already can borrow against it for example.
    Thanks for your insights. You seem very knowledgable. Do you work in finance?

    If you were to buy a 2 bed property today, where would you buy? Taking into account growth prospects?
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    (Original post by Fruli)
    I have curiously been looking at London property on the help to buy websites and I find it just so ridiculous that to get a property in London you are looking at minimum of 500k.

    It's fair enough that you can potentially buy a share through the various schemes, e.g. 25% share of 125k, but on top of that you need to rent the other share, which is typically around £500-800 in rent per calendar month.

    So my question is, who is actually buying these properties?

    It seems to me that this is a market that has been shored up by foreign investors. The question is, if we see a global recession in the next 2 or so years what will happen? My friend from China seems to think there's a time bomb in china ticking away and that a recession is inevitable. A lot of people who have invested in London property are from China. If things go wrong there then it will have a dominoe effect. Are we likely to see a crash in London?
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    (Original post by Fruli)
    Thanks for your insights. You seem very knowledgable. Do you work in finance?

    If you were to buy a 2 bed property today, where would you buy? Taking into account growth prospects?
    No, but I studied economics and I read around the subject and keep up with the news.

    The obvious places to buy in London are always the ones about to be gentrified, as prices surge in neighbourhoods where gentrification has taken place. Recent examples include places such as Brixton, Clapham and Hackney. The gentrification wave is gradually heading further out, so places like Lewisham are now on the radar. Also anywhere along the route of the Crossrail / Queen Elizabeth Line - particular hotspots are places like Whitechapel/Bethnal Green (where I live) and basically anywhere on Crossrail near a route station.
 
 
 
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