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Englishmen's homes are still castles, with prices to match
October 12, 2010 9:16 AM   Subscribe

Depressing million-dollar London property. Even in the economic crisis, £635,000 doesn't get you much inside the M25: you can take your pick of a worker's cottage near a football stadium, an Australian backpacker-style apartment near Earl's Court, a 2-bedroom house right near the ring road or various other similarly dispiriting residences.
posted by acb (52 comments total) 5 users marked this as a favorite

 
See also Crack Shack or Mansion?
posted by condour75 at 9:22 AM on October 12, 2010 [2 favorites]


Why are they measuring UK property prices in US$? You may as well talk about what €1 million gets you in Australia or what £1 million gets you in Japan.
posted by EndsOfInvention at 9:29 AM on October 12, 2010 [2 favorites]


Ah, but how much house will 1 million Swedish kronor buy me in Kigali?
posted by 1adam12 at 9:33 AM on October 12, 2010


Do these properties actually sell? If so, what exactly is the economic background of the people who buy them? Unless we're talking about elderly people with money in the bank wanting a quiet retirement, I would assume any quasi-millionaire would buy something that underscores importance to their fellow business contacts and peers.
posted by crapmatic at 9:37 AM on October 12, 2010


OMG! You can't get a big 1 br apt in London for $1,000,000!

Or New York.

Next...
posted by i_cola at 9:37 AM on October 12, 2010


I grew up about ten minutes' walk from here, and I know it well. It sounds like a classic example of 'garden grabbing' where somebody is just selling off their parking spaces.

My guess is that they're hoping a developer will buy it for a low-rise 'executive apartment block' then attempt to sell many million-dollar units.

And it's worth it. If you really like the smell of canal, and the primary school nearby, and being on a floodplain.
posted by randomination at 9:39 AM on October 12, 2010 [1 favorite]


I don't know if this is the case in England, but a friend relocated to Ireland recently and reports that the reason home prices remain outrageously high despite the crash is that there is no public record of sales prices. So, sellers are convinced that their place remains worth what it was during boom times because there is no convincing evidence to the contrary. My friend continues to rent.
posted by exogenous at 9:43 AM on October 12, 2010 [1 favorite]


Who can afford payments on houses that expensive? If you have a $1,000,000 mortgage, you're paying somewhere around $10,000 a month for principal, interest, taxes and insurance. I mean, I know that there are some people who make enough to afford that but wouldn't that be less than 5% of the population? Who's buying all these million dollar shacks?
posted by octothorpe at 9:54 AM on October 12, 2010 [3 favorites]


That's not depressing. In March an apartment measuring just 11 x 5.5ft went on the market in London for £200,000.

That's £3,300 per square foot or $5,000 per square foot in your new fangled Yankee dollars.
posted by MuffinMan at 9:57 AM on October 12, 2010


Perhaps someone in England--or really, I'd be interested in the Australian, Japanese, or any other perspective--can enlighten me on how these domiciles are purchased/financed/afforded by their residents.

Since the comparison was made with the US, and I'll be Americentric here and assume that you all have heard how we come to the table with somewhere between 5% and 20% of the purchase price, plus another wad of cash for fees, title insurance, general pick-pocketing by other hands-in-the-till, so, call the median home price in the US about $225K, the buyer'd come to the table with somewhere (roughly) between $25-$50K in cash/equity. The median household income in the US in 2006 was about $50k.

How does it work in your country? For London, 2009 figures show that individual earners median income was about £32500, double that for a rough estimate of household income. What type of money down, what type of financing happens?

I'm curious to know so that this Million Pound Tenement has some resonance in my language. Would it be like $250k for a railroad flat in near Poughkeepsie, or more like $50K--in terms of its everyday affordability?
posted by beelzbubba at 10:00 AM on October 12, 2010


This is kind of dumb to me.

Why is this depressing? It's decent looking commercial property (including rental income from flats above) in a busy and up-and-coming part of London.

While not the most attractive building in the world, this is in Chelsea for fuck's sake - of course it's expensive.

It's like this was created by someone who doesn't actually know London at all.

There are also perfectly reasonable alternatives to the £650K+ residential market, depending on what your looking for.

2 beds, below £325K in a nice area of SW London
2 beds, below £325k in East London
posted by generichuman at 10:03 AM on October 12, 2010 [1 favorite]


Who can afford payments on houses that expensive?

Good question. Typically a mortgage will work on a 2 or 3x earnings basis. This would mean a household income of at least $300,000 per year if the house was being bought wholly on a mortgage.

However, $1m is not expensive for a house/apartment by central London standards. Several thousand of them are for sale today, for example.

The answer is:

- Foreign investors, buying in Euros where the pound is weak against the Euro.
- Dual income or high single income households where a substantial profit has been made on a previous property
- [In the past] Buyers grossly inflating their earnings to mortgage companies, who are probably still OK as interest rates are low
posted by MuffinMan at 10:05 AM on October 12, 2010


Ok, this just gets stupider. Depressing backpacker hovel? There are no internal photos. It's two beds in Zone-Fucking-1 with access to common gardens. Surprise, it's pricey.
posted by generichuman at 10:13 AM on October 12, 2010 [1 favorite]


You gotta look at this in the context of interest rates as well. The base rate is .50 bps so you get a mortgage for <4% - distorts things a bit. UK market fixed rate mortgages barely exist so there is greater movement in home prices relative to rates then there is in the US.

This is not to say that even adjusting for rates prices aren't a bit untenable.

Also don't forget mortgage isn't tax deductible and there is no such thing as property tax (in the sense that Americans think of it) so apples to oranges when comparing vs the US.
posted by JPD at 10:30 AM on October 12, 2010


Surprise, it's pricey? The world is so weird.

Here is what $8000 will buy you in Indiana (if you're a genius like myself). Now tell me again how two bedrooms anywhere justifies throwing over a hundred times that into the gutter.
posted by Michael Roberts at 10:32 AM on October 12, 2010 [3 favorites]


Ah, but how much house will 1 million Swedish kronor buy me in Kigali?

Well this beauty will only set you back 837000 SEK, and it looks a good bet. All of the utilities are in, and they boast a mountain view. I'd check to see exactly how far off the main tarmac road they are, though.
posted by Homeboy Trouble at 10:32 AM on October 12, 2010


"Now tell me again how two bedrooms anywhere justifies throwing over a hundred times that into the gutter."

Well, not having to live in Indiana would certainly be a big part of the justification (as well as being a huge relief to the new home owners).
posted by oddman at 10:44 AM on October 12, 2010 [3 favorites]


Now tell me again how two bedrooms anywhere justifies throwing over a hundred times that into the gutter.

I've been to Indiana.
posted by i_cola at 10:50 AM on October 12, 2010 [1 favorite]


I'm afraid the gist of this article is not correct. London is expensive, but it's perfectly possible, and not even that hard, to find decent family homes in decent locations for less than £600k.

As an example the "workers cottage near a football stadium" they mention... well that would be in Islington, one of the trendiest and most expensive areas of London, only a very short tube ride from the main financial district.

It's the area where Tony Blair used to live for goodness sake.

"Inside the M25" is a much bigger region than those comparisons like that suggest, and what they're doing is like citing trendy Manhattan spots as if prices there represented the whole of New York city.
posted by philipy at 10:54 AM on October 12, 2010 [5 favorites]


There is a huge backlog of unsold property everywhere in the UK right now, property listings which used to be 5 page pamphlets are starting to resemble the yellow pages.

But still the prices go up: "it's been advertised for 3 years and hasnt sold, lets try adding 20K to the price."
posted by Lanark at 10:55 AM on October 12, 2010


Here is what $8000 will buy you in Indiana (if you're a genius like myself). Now tell me again how two bedrooms anywhere justifies throwing over a hundred times that into the gutter.

I lol'd.
posted by thirteenkiller at 10:57 AM on October 12, 2010


The interesting thing to me is the extent to which house prices in some major cities are disconnecting from the rest of the country. In Brownstone Brooklyn, prices have barely dropped at all, and even seem to be heading towards Manhattan prices. Here's a particularly crazy example: asking $1.7M for about 1000 square feet in a new building going up that's literally 50 feet from the Brooklyn Queens Expressway trench. The last couple of years only seem to have exacerbated the trend.
posted by Combustible Edison Lighthouse at 11:04 AM on October 12, 2010 [1 favorite]


sellers are convinced that their place remains worth what it was during boom times because there is no convincing evidence to the contrary

The lack of sales at the prices they're asking looks pretty convincing to me. But then I have no skin in that game. We can only assume that they thing time is on their side - in which case, they may as well take the signs down, unless they are really willing to negotiate.

My guess is they can't afford/bear to take the hit after what they bought them for.

There are various prices in real estate. What the seller needs is only one of them, and is the least important
posted by IndigoJones at 11:05 AM on October 12, 2010


Perhaps someone in England--or really, I'd be interested in the Australian, Japanese, or any other perspective--can enlighten me on how these domiciles are purchased/financed/afforded by their residents.

Japan doesn't really do mortgages. Most ordinary people don't use them to buy houses, at least since the big banking crisis. Instead, regular folks live in tiny apartments, save like crazy, and finance most or all of a house themselves. Some will get help from family, some will take out loans through their employers, and plenty will live in multi-generational homes that were paid for long ago.

Mortgages exist, but are no where near as common as in the west.
posted by Alison at 11:14 AM on October 12, 2010


Perhaps someone in England--or really, I'd be interested in the Australian, Japanese, or any other perspective--can enlighten me on how these domiciles are purchased/financed/afforded by their residents.

The only working formula that I've seen work for regular people is the same one that works in every major world city:

Two good incomes + no children + no car.
posted by generichuman at 11:20 AM on October 12, 2010


look at all those people being upset over money.
don't they know it's gone at the end of the month anyway?
posted by krautland at 12:13 PM on October 12, 2010


Ok, this just gets stupider. Depressing backpacker hovel? There are no internal photos. It's two beds in Zone-Fucking-1 with access to common gardens. Surprise, it's pricey.


Generichuman and philipy this. The site is very misleading. It's not even using words to mean what they mean: the 2-bedroom Australian traveller style apartment is called a bedsit. Well, what is it? Two bedrooms, or a bedsit? (For those unfamiliar: bedsit = bedroom/sitting room, e.g. an apartment where the living space is combined with the bedroom).

A four-bedroom semi in Finchley sounds like a pretty damn good place to live, if that's what you want.

It's also out of date: Earl's Court might have been full of Aussies in the 70s and 80s, but I don't know a single traveller who lives there (and I've known plenty).

That said: I probably wouldn't pay $1m for any of these places, but they aren't as bad as the site implies.
posted by Infinite Jest at 12:18 PM on October 12, 2010 [2 favorites]


Meanwhile my parents beautiful immaculate home near Durham (in the mid £80ks ) has been on the market for a couple of years. The British property market is crazy!
posted by blue_beetle at 12:27 PM on October 12, 2010


Re how people afford these properties....

1) As those of us that know London have said, the article is grossly misleading, and there are much cheaper properties around than it would have you believe. It has also gone out of its way to make the properties sound far far worse than they are, and totally downplayed just what kind of upscale areas they are in.

2) The kind of places that are cited (houses in Islington, apartments in Chelsea) would often be bought by London's equivalent of Wall Street types, or by rich foreigners. It's not an accident that one apartment description makes a point of how easily you can get to Heathrow airport.

3) Older people who already had property to trade in aren't seriously affected, as the price of what they have to sell has gone up just as much.

4) Yes, it is just plain hard for young people with moderate salaries to buy. Two incomes, saving up and waiting til later in life, help from parents, taking on mortgages that are high multiples of salary etc are usually needed.
posted by philipy at 12:28 PM on October 12, 2010


I'm afraid the gist of this article is not correct. London is expensive, but it's perfectly possible, and not even that hard, to find decent family homes in decent locations for less than £600k.

You're missing the point if you think £600k is perfectly reasonable for a family home in an ok neighbourhood. The market is vastly inflated and in dire need of re-baselining, but the crash (this time) never came and the government doesn't have the teeth to do anything about it.
posted by londonmark at 12:40 PM on October 12, 2010 [1 favorite]


What's absolutely fascinating is how you can pay buy a house in London, and still not own the land it sits on. Just a handful of families own 650 acres in London and lease this property to homeowners.
posted by zippy at 12:42 PM on October 12, 2010 [2 favorites]


londonmark, I agreed that London is expensive, and I agree that is a big problem.

But it is not so expensive that it costs $1m / £625k+ to even buy a hovel anywhere inside the M25, which was the impression purposely created by the article.

If you want to write an article about why £200k is too much for people on average salairies to be having to pay for decent houses, I won't disagree at all. But if you claim that £600k only buys you a squalid place to live anywhere in London, that is as I rather mildly said "not accurate".
posted by philipy at 12:59 PM on October 12, 2010


What's absolutely fascinating is how you can pay buy a house in London, and still not own the land it sits on.

You can also go broke paying for renovations on the local church.
posted by Combustible Edison Lighthouse at 1:23 PM on October 12, 2010


If you want to write an article about why £200k is too much for people on average salairies to be having to pay for decent houses, I won't disagree at all. But if you claim that £600k only buys you a squalid place to live anywhere in London, that is as I rather mildly said "not accurate".

Well ok, I think we just interpreted the OP differently. I agree even in London £600k can go a lot further, but that doesn't mean those examples are any less bonkers -- or typical. I'll stop typing now :)
posted by londonmark at 1:42 PM on October 12, 2010


What's absolutely fascinating is how you can pay buy a house in London, and still not own the land it sits on. Just a handful of families own 650 acres in London and lease this property to homeowners.

This isn't really unusaul is it? What would be half of my city if it wasn't reserve is owned by the local first nation. They make serious bank leasing the land only to residents and businesses who own the the building on the land. This pattern is wide spread at least in BC and Alberta and I'd imagine everywhere else in Canada.

And anyone who owns a condo doesn't actually own the land it sits on rather owning a share in an association that grants them access rights and to which they pay fees for upkeep, fees and taxes.
posted by Mitheral at 1:42 PM on October 12, 2010


This isn't really unusaul is it? What would be half of my city if it wasn't reserve is owned by the local first nation. They make serious bank leasing the land only to residents and businesses who own the the building on the land. This pattern is wide spread at least in BC and Alberta and I'd imagine everywhere else in Canada.

virtually non-existant in the US - only a few buildings in NYC have ground rents and really no where else in the country has it. It is difficult to get a mortgage in most buildings with ground leases as well.

I would be surprised if they are very common in most of canada as well.
posted by JPD at 1:51 PM on October 12, 2010


Are they supposed to be "dispiriting" because they're not McMansion sized? That cottage looks pretty cute; I immediately thought of these Brooklyn institutions, and I don't even wanna know what they're going for.
posted by Halloween Jack at 1:56 PM on October 12, 2010


I immediately thought of these Brooklyn institutions, and I don't even wanna know what they're going for.

Well over a million.
posted by Combustible Edison Lighthouse at 2:22 PM on October 12, 2010


I think these properties are dispiriting and depressing because they seem to indicate that only billionaires can afford to live in London. It's not that there's anything wrong with the property themselves - they are ordinary dwellings, and it seems like ordinary people should be able to afford to live in them.
posted by Jess the Mess at 2:28 PM on October 12, 2010


I think these properties are dispiriting and depressing because they seem to indicate that only billionaires can afford to live in London. It's not that there's anything wrong with the property themselves - they are ordinary dwellings, and it seems like ordinary people should be able to afford to live in them.

They are ordinary buildings. But, what the original article is misleading about is the fact that they are, by and large, in extraordinary locations.

Earl's Court is a major transport hub on the tube, and a stone's throw from Kensington. It is also in Zone One of the TfL system, meaning basically "central London". Anything in this area is very expensive, more or less due to the lack of land.

The place in Islington is about a 5 minute tube journey into The City, which is the financial heart of the UK, and possibly the western world. A lot of rich people are willing to pay for that kind of convenience.

The place in Chelsea is, well, Chelsea - home of some very rich people, indeed. You're right near the Tate Britain, and could easily walk to Buckingham Palace. Seriously, the Queen is like a mile away. It is also across the river from the site of the new American Embassy.

There is a very interesting point to be made about prices in London, but these places are still (for now) the exception rather than the rule. Not to say that the normal 2-bed flats and small houses that regular working people buy are cheap. They're not. But this article completely misses that, and betrays a real lack of understanding of how the city works.
posted by generichuman at 2:43 PM on October 12, 2010 [2 favorites]


According to the BBC, the average price for a house in London in April-June was about £400,000. UK prices fell in September.
posted by ersatz at 3:15 PM on October 12, 2010


If you want to read about expensive London real estate and the people who buy it, then the FT has your man. Great fun.
posted by IndigoJones at 4:06 PM on October 12, 2010


I always assumed the secret agent column was parody, but then I thought the same of Tyler Brule for the longest time.
posted by JPD at 5:05 PM on October 12, 2010


only a few buildings in NYC have ground rents and really no where else in the country has it. It is difficult to get a mortgage in most buildings with ground leases as well

My former co-op apartment in Washington, DC had a ground lease. It was due to expire in relatively short time - well within my lifetime. It also had exorbitant monthly fees and there were only about two or three banks that would give you a loan (maybe one of which would return phone calls). Just before the real estate market tanked, I managed to unload it to some genius who worked at the World Bank. Sorry, World Bank genius, if you're reading this.
posted by exogenous at 5:13 PM on October 12, 2010


I always assumed the secret agent column was parody, but then I thought the same of Tyler Brule for the longest time.

Indeed! I still have my doubts about Brule (those accents!), and that's even after thumbing through his magazine.
posted by IndigoJones at 5:35 PM on October 12, 2010


Perhaps someone in England--or really, I'd be interested in the Australian, Japanese, or any other perspective--can enlighten me on how these domiciles are purchased/financed/afforded by their residents.

Without even having to get into million-dollar properties, there are real issues for young people in Australia getting into the property market, especially if they want to live somewhere desirable (and in some cases even if they don't). Banks here have traditionally been more than happy to lend people considerably more than they can afford, and people have been traditionally keen to take that money.

Last time I ran the numbers the median house price in Canberra (where I live) was completely unaffordable on the median income. I suspect that hasn't changed. So people keep renting for years, or move further out of town. But luck also plays a part – people manage to buy when the interest rates are low and the market is down. Or they buy someone cheap and crap and fix it up. I suspect that's true of most of the world.

But there are plenty of people who can afford the expensive places, so there continues to be a healthy trade in them. Canberra has a disproportionate number of these people, so they tend to push up the median prices, distorting the view somewhat

With regards to the OP, we recently stayed in a flat in Hammersmith in London recently bought by some friends. They sold a three bedroom home on a suburban block in Canberra and used the money to buy a one-bedroom flat in London (and the whole transaction was much more in the $AU600k range than the $US1million range). Personally, I think that's a pretty damn good trade, and I'd do it myself if I owned a three bedroom home in Canberra.
posted by damonism at 6:06 PM on October 12, 2010


Without even having to get into million-dollar properties, there are real issues for young people in Australia getting into the property market, especially if they want to live somewhere desirable (and in some cases even if they don't). Banks here have traditionally been more than happy to lend people considerably more than they can afford, and people have been traditionally keen to take that money.

The city where I currently live, Perth, has the worst example of this ever. The median multiple of Perth was hitting into the 8s back in 2007, has declined back to a rather "affordable" 6.9 and is set to surge again as the front page news today indicated a "20% increases in prices by 2013".

The problem is the two speed economy in Australia right now. Part of the country (WA) is being driven by the boom in commodities from the GFC recovery and massive amounts of investment by China while the rest of the country stagnates. The mining part of the population see $450,000 on a 3x2 as a drop in the bucket on their $150K income while white collar people like me on $50K can't believe the number in front of those zeros. Even if you want to live out beyond the black stump you still pay $200K for a block of land + $180K for a house.

Negative gearing has ruined the housing market in this country. There's a reason why that scam is illegal in most of the developed world.
posted by Talez at 8:04 PM on October 12, 2010


I live in Canberra, Australia.

In 2001 we thought about buying our own home because the landlord wanted to put our rent up to $190 a week. We looked at suburban houses - then about $140K for a three-bedroom brick veneer house on a modest block in a not-too-distant suburb. We turned down a house on a 950m2 block in Curtin - CURTIN - for $190K, because who the hell paid that kind of money for a house? We decided to buy acreage instead, and spent a year picking out the perfect block, attending a number of strawbale building workshops and drawing up plans.

Just before we settled, the wife's family decided to move to town from interstate. We didn't see the point of living an hour away from family, so we decided to buy in town after all. In that year, prices jumped $80K. We were looking at houses that were $140K a year ago for which the owners now wanted $220K. It was ridiculous - my parents' double brick 5 bed / 3 bath / 10 acre McMansion cost $250K only a couple of years earlier - but we quickly realised that prices were continuing to rise and that if we didn't bid the asking price somebody from Sydney would.

We're still in the house we purchased in 2002 for $220K (my salary at the time was about $55K; my wife's was about $35K). We inspected it for about a minute and a half before putting in an offer for the full asking price. We felt decidedly ripped off - a pokey (112m2), brick veneer, 1981-depression era dog box, although on the largest block for miles (~1200m2), and for slightly less than the suburb's median property price ($250K - up from $190K the year before).

The unimproved capital value (UCV) of the land when we moved in was $76K. A year later we got our first rates notice, and I thought there was a typo, because the UCV was now $176K. Within a couple of years the median property value in the suburb climbed through $300K...$350K...at the end of 2008, the house next door sold for $375K...$400K...$450K. Today, eight years after we moved in, the median property price is $510K.

Today, I can't believe how lucky I am. My Gen Y peers are gobsmacked that my mortgage is less than $200K, or that I live on such a enormous piece of land. My salary is now more than $120K, so my wife doesn't have to work for somebody else and can be a full-time mum. Land at a development in the west of the city was just sold for $1000 per m2 - yes, $400K for a 400m2 block...that won't be ready to build on for two years, but which you had to be willing to put down 10% for today, and then you have to find money for a house. I listen to younger colleagues who are buying their first house and wonder how the hell they do it.

At the start of the century, Sydney was the property nightmare. But a few months ago my brother picked up a gorgeous double-brick, two storey, four bedroom, 2.5 bath house in a nice suburb with a huge double garage, workshop, in-ground pool etc for $449K. You can't buy an ex-Housing Commission flat for $449K in Canberra.
posted by obiwanwasabi at 1:27 AM on October 13, 2010


Halloween Jack: "Are they supposed to be "dispiriting" because they're not McMansion sized?"

Bingo, sort of. It's a bit of a weird comparison generally, because 'a million dollars' doesn't really mean anything in the UK, thanks to currency differences. Nearly everything is more expensive in absolute terms, but not really in relative terms. A $20 t-shirt sold by GAP will be £20 in the UK ($31 as of right now), but the hours worked to earn the money to buy that shirt are roughly equivalent. In other words, £20 is worth roughly the same to us in terms of purchasing power as $20 is to us. So, really, this site should be, if it was even half-arsed, be looking at million pound properties, not million dollar.

That aside - this is a pretty small country and London is the most crowded part of it. You pay a premium to live there. My personal feeling is that that premium has become progressively higher over the years, to the point where you either have to inherit a property, have bought it decades ago or simply be absolutely loaded to get on the property ladder anywhere inside Zone 2. I lived there for six years and never even considered trying to buy a home - it simply wasn't on the cards.

But yeah - British homes are smaller, relatively speaking. Homes in London can be on the absurd end of the price per square foot scale. But this is a weird, non-representative, US-centric look at one of the most overheated and unusual housing markets in the UK. I've been on the receiving end of a lot of US boosterism about quality of life when I visit the US, and I can see the appeal, sometimes. You get bigger houses, bigger fridges, cheaper fuel etc. But I prefer integrated transport networks, universal healthcare and everything else that comes with life on this crowded isle. This seems like a bit of reassurance for Americans that 'those Europeans are crazy', rather than any sort of meaningful analysis.
posted by Happy Dave at 1:56 AM on October 13, 2010 [1 favorite]


as $20 is to you, even.
posted by Happy Dave at 1:58 AM on October 13, 2010


£20, same as $20
posted by criticalbill at 4:52 AM on October 13, 2010


Can I just observe that the listing in Walthamstow is actually for two adjacent buildings, not one?

Good. Thanks.
posted by genghis at 12:11 PM on October 13, 2010


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