Lewisham still among most affordable choices for Generation Y

Another Savills map of London, this one designed to show how much a member of Generation Y would need to get on the property ladder.

Obviously, this is all fairly frightening for most first-time buyers, but despite the fact that Lewisham has been playing catch-up with London's pricier boroughs, it is still among the most affordable parts of the capital, with £37,000 per annum just enough to get you a mortgage, assuming you have 20% deposit(!).

Despite this, Savills also shows that Lewisham has suffered a relatively sharp fall in home ownership among under 35s over the last decade or so. Presumably this is mostly because there were relatively few young buyers in many other parts of the capital already, so we had further to fall.
Savills comments:

This is not just a moment in time. The very strong house price growth in the first half of the noughties substantially altered access to home ownership and the shape of the housing market... The mortgage market review is going to continue to restrict access to home ownership and ensure a continuation of this trend... Accordingly, younger households will undoubtedly rent for longer and enter the housing market later in life, possibly when they can pool two incomes or for the lucky ones, take advantage of the housing equity built up by parents and grandparents. 

As a result, government policy needs to become less fixated on home ownership and look to substantially increase the supply of good quality rental accommodation.

Any Lewisham election candidate that does not have much to say about housing strategy is not worth voting for. #Lewisham2014

60 comments:

Hugh said...

Great to be a home owner. Pull the ladder up.

SG said...

The mortgage market review may prevent mortgages being handed out so easily thus causing a reduction in prices, though has many loopholes. Before 2008 we ended up with more than 50% of all mortgages being self-certified. This meant no proof of income had to be shown to banks and mortgage brokers. So someone on 20k could lie and say they earned 40k and no checks were made. This was covered extensively before 2008 in various radio, TV and broadsheet articles but the authorities did nothing.


it aided 10 years of 10% or greater rises per year as wage growth only average 3% per year. Tit also led to a massive growth in sub-prime and now results in 0.5% interest rates as those people can't afford higher rates, punishing the responsible who saved. Those savers are now struggling with minimal savings rates to get a deposit.


Bringing in tighter checks is essential to reduce prices, stop fraudulent applications and have a level playing ground.


Osbourne has tried to make up for this with the govt now paying 20% of borrowers deposits and doing all he can to prevent public building. The whole thing is full of govt intervention to keep prices high and make it very difficult for the young.

Economic Migrant said...

You either have to reduce demand or increase supply. Its not rocket science. My suggestion would be to focus on the later but the chances of planning law to be sufficiently liberalized any time soon are pretty slim given that the staus quo suits those who actually can be bothered to vote at elections.

Brockley Nick said...

we've already had a substantial tightening of mortgage lending. That's one of the reason it's so hard for people to get on the ladder. Not sure that there's much scope to tighten lending conditions further, is there? Also, there was no sub-prime market in London (Belfast, et al, sure). That's why house prices barely dropped in the capital in spite of the deepest recession in modern history.

Anon said...

These stats underestimate the problem, there are plenty of generation X, who still can't afford to buy in London and I don't know many generation Y'ers on £37,000+ salaries. But pride does comes before a fall.

Could you imagine if a large number of renters defaulted and were forced to moved else where. Due to job loss or an interest rate hike. There is still far too much unsecured debt and credit available and the economy is still far from strong.

How many landlords could realistically cover several mortgage? And for how long?

Brockley Nick said...

"I don't know many generation Y'ers on £37,000+ salaries." But plenty of Gen Y couples who would have that combined...

Brockley Nick said...

"Could you imagine if a large number of renters defaulted and were forced to moved else where." The jobs market in London means that is not a realistic threat. There will always be more renters to come. But the rental market is clearly cooling, so there will be some BTL landlords who will be nervous now...

terrencetrentderby said...

"chances of planning law to be sufficiently liberalized any time soon are pretty slim given that the staus quo suits those who actually can be bothered to vote at elections." - Welcome to Nimbystan (c)

Anon said...

That's still a big assumption in the current economic climate, I would like further evidence of this @Brockley Nick:disqus and also can you provide links to this mystical affordable property you speak of ;)

Anon said...

The Jobs market is still swaying wildly and these affordable homes are still not affordable or even built yet. So in the end people will be forced to follow the work, new comers need jobs, income, references etc to rent or get a mortgages. I think too over optometrist can reach just as much havoc.

Hugh said...

Any Gen Y'er working in the City will be on more than 37k. Brockley as the new Clapham, yah?

Hugh said...

Or at the Wharf.

Brockley Nick said...

I don't really know what you mean by "the jobs market is still swaying wildly" but in London at least the jobs market is buoyant and the economy is sufficiently diversified that the jobs market is also sustainable.


Moreover, all forecasts are that London will increase its population by around a million in the next decade. They won't be coming for the clean air, those people will move here for the jobs. This is a long-term trend. London is a jobs-creating machine.

Brockley Nick said...

Not "any" Gen Y-er. But yes, lots will of course.

Brockley Nick said...

It's not an assumption, it;s a statement of fact. There are lots of people in their 20s who either individually or as a couple earn more than £37K. There are many more who can't


It's only "affordable" relative to the rest of London.

Brockley Nick said...

Welcome back Hugh. It's been too long.

Anon said...

@Brockley Nick Really show us what you can buy in Lewisham.

Anon said...

Clearly not if you work for Banks such as Barclays or The Co-op ;)

maisie_moo said...

Is the rental market cooling? With a growing population, many of whom can't afford to buy, and a housing shortage, that would be pretty surprising.

anonymouse said...

How about this? http://www.rightmove.co.uk/property-for-sale/property-29968005.html

Brockley Nick said...

http://bit.ly/1omI7Js

Concerned Floating Voter said...

You are right this housing debate should be a big part of the Lewisham council and mayoral elections. I want a candidate who supports more housing, pushing back against the Nimbys, but won't stand for ugly blocks and wants good architectural quality.


I'm googling to see where Council candidates are on these questions. I can find very little info indeed. Are we going to have an online BrockleyCentral hustings? (please include Telegraph Hill ward if you do!)

Anon said...

@Brockley Nick are you really happy with your cursory due diligence, you didn't checked the details of all those properties, before hitting publish... did you? ;)

I think you'll find several were were under offer, public auction, 1 for over 65, 1 for 55yrs+ 1run by a social housing group, 1 garage and 1 commercial premises, some already in receivership, most probably only realistically available to cash buyers... the numbers seem to diminishes further, from first 35 yielded in your pointless search.

I'm sure you'll find some aren't easily mortgageable.

Your cut and past response is just a wast of time, like your argument.

I think you have no real grasp of the bottom end of the market as that's all that I and a large section of my contemporaries are faced with and have been faced with for far too long.

Your stance is more fiction than real fact and your argument is so shallow, it comes with it's own saucer.

Brockley Dogging Society said...

Give us a little tug?

Anon said...

Are we're specifically talking the Jobs market for those independently wealthy, first time, Generation Y, home buyers or are you going slightly off piste.

We all know the wider labour market will have the greater impact, but housing for who and jobs for who?

There is a massive imbalance at the moment.

Brockley Nick said...

Oh, I'm sorry, did one or two of those properties found with a five second search on Zoopla not quite fit your brief, Phil Spencer?


How about you do YOUR due diligence and read what the article actually says, rather than what you think it says. I don't make any claims, I'm only reporting data from a respected analyst and I don't say it's good news, I say it's worrying and affordability is a major issue that needs to be a priority issue at this election.

Brockley Nick said...

We're not talking about buyers, we're talking about renters.

Economic Migrant said...

Lending standards will be tightened further before the Bank of England hike interest rates. In Mr Carney's previous role the Bank of Canada reduced the length of loans that banks could provide from 25 to 20 years. They will do something like this here or maybe force banks to reserve more capital against home loans. I am not sure why they couldnt do this for London post codes only to be honest. None of this addresses the basic problem that demand which is elastic is higher than supply and supply is very price inelastic due to supply side constraints.

Tim said...

We all want lots of non ugly, well built housing in London. Do you think there's a structural reason why it's not happening? What can a ward councillor do to affect the whole structure of the housing stock in London?

Let me put it another way. If someone said "where are you on this question?", I would say: "yes, I'm all for more quality housing and will do all I can to make it happen".

Empty words - where does it get us?

The solution is at national level and for the people who are affected (the young) to make it a crucial election issue. It'll never happen as the older generation will always outvote the young.

Headhunter said...

Reducing demand clearly isn't an option as no government is going to take the decision to limit London's economic growth simply due to housing supply.


Increasing supply appears to be the only possibility however that is fraught with problems... Do we expand London ever outwards through Kent and Surrey, across green belt etc creating a massive concrete conurbation akin to Tokyo where you can travel for hours and hours out of the centre without seeing a tree? Or do we build upwards? Build taller and taller? Problem with this is that people want to preserve London's historic skyline and quite often there simply isn't the space for huge residential towers without demolition of people's homes, these buildings have a pretty large footprint, also given our experiences of building towers from the 1960s and 1970s, a lot of Brits have an aversion to tall resi buildings.


The other option is to build over every inch of green space we can and really cram those homes in making rooms smaller etc. Londoners already have the smallest homes in Europe on average and although most people don't mind building on derelict brownfield sites, most people would object to Hilly Fields for example, being turned into a major housing project.


So what do we so? Perhaps we should pursue the policies of the 70s and 80s by building new towns like Milton Keynes which and then investing heavily in transport and rail links into central London? This would allow people to live outside London but get in quickly and cheaply. Perhaps the government should do more to get business to locate outside the SE of England - there are vast swathes of cities like Hull and Newcastle which would welcome a fraction of the industry London has and where you can buy and entire street for the price of a 1 bed flat in London..... The problem is that London is like a rainforest, it has become delicate network of business synergies with intricate systems of businesses supporting each other focused on specific functions, to try to move that away to a northern city is quite hard. As in a rainforest, once you start to remove one species, you end up with imbalance and decline...


There's a bit more to this than NIMBYism...

Headhunter said...

OMG Hugh and the BDS back - it's like 2008 all over again...

Economic Migrant said...

"Do we expand London ever outwards through Kent and Surrey, across green belt etc creating a massive concrete conurbation akin to Tokyo where you can travel for hours and hours out of the centre without seeing a tree?" I would say yes we shoud. The Green Belt is an idea like the NHS. So brilliant it has been copied by no other countries.

AliAfro said...

If £37k is 20% then purchase value would be £185k. Nick's zoopla research is actually quite conservative and only goes up to £160k. If you push the price up to £180k there are 68 properties for sale and there are 81 under £190k.

Headhunter said...

Well I guess there we differ.... I really don't want to see unfettered construction across the SE of England to the point that we end up with unending concrete from Bromley to Brighton...

john said...

Must be graduates in full time employment, with little or no debt.

Tim said...

Yes, there are any of them in London

PeoplesAssemblySEL said...

The hustings event to be at if you want to hear about the local political party's policies on housing is this one. pic.twitter.com/hmTZsT5VQA Thursday 17th May. Joe Dromey, (Labour) Ray Woolford, (Lewisham People Before Profit) and Chris Flood, (Trade Union and Socialist Coalition) are amongst the confirmed speakers. Labour have promised to build 500 homes by 2018. People Before Profit have worked with the the Radical Housing Network http://radicalhousingnetwork.org and are bound to bring something interesting to discussions on this important issue.

Broca said...

The sub-prime problem is yet to materialise in London. MMR, FI deals, IO mortgages and rate rises will flush out a lot of forced sellers in the next five years. It's not all bad news for Gen X.

Broca said...

Sorry, Gen Y!

Hugh said...

Did you all take my advice and live Tory or are you still wringing hands over the cost of living? I ask as a substantial investor in the neighbourhood. Lord of Brockley Manor, if I may make so bold.

Tim said...

There's not much representation across the political spectrum, is there? It starts at Labour and goes left.

Pepe said...

In principle the property price is a simple economic problem to solve.

Like any commodity, property prices are set by the price of the marginal traded units every year.

Given that less than 1m properties sell every year out of a total 27m UK household stock and that 85% of central London properties were bought by foreigners in 2013 the solution is simple and already tested in other countries:

1) heavily tax second homes and buy to let to the point they become economically not viable.
2) dedicate 98% of the housing stock only to residents creating a parallel, but well separate, market for foreigners trading amongst themselves the remaining 2%.
3) Stop land planning speculation using heavy tax disincentives to keep the cost of new build low and permit for higher quality.
4) Increase the offer

Will this stop the Economy? certainly not. Will it happen? certainly not because politicians generally are incompetent.

Economic Migrant said...

There hasn't been a problem with sub prime loans in the uk at all. Even with house prices falling 15 plus percent in real terms in many areas. I see no reason for the boe to raise rates a great deal since very inflation rates dominate around the globe. Prices will continue to rise over the medium term as long as demand keeps expanding whilst supply is constrained.

PeoplesAssemblySEL said...

Defend Council Housing, who are organising this event, have invited all the political parties, from their tweet on 9th May "Glad to confirm that Labour, Greens, People Before Profit, Tories & TUSC will all be speaking at the Housing Hustings" .


Our post was highlighting who we know from that the parties attending.

PeoplesAssemblySEL said...

Here's the tumblr with full details of who's speaking at this event http://lewishamdefendcouncilhousing.tumblr.com/post/85535220839/housing-hustings-put-your-questions-to-your-potential

Economic Migrant said...

It is probably worth pointing out a few flaws in this proposal.
1. We have a national housing shortage, the fact that foreigners are currently buying central London property is of no importance.
2. What would happen if foreign buyers were prohibited from buying new build properties? The answer is that they would not be built since they buy off plan and provide funding that banks will not provide.
3. Second homes are already liable for capital gains tax. Introducing asset specific taxes distorts investment decisions in a sub optimal way. Moreover what % of the UK housing stock are second homes and are the woned in areas that are economically viable?
4. Why tax buy to let out of existence? Renting is perfect for some people. Moreover the market will correct if buy to let exceeds an equilibrium level since rental yields will decline as the supply of rental properties increases.
The only way to lower prices is to either limit demand meaningfully by say banning all immigration, divorce, procreation etc or by increasing supply of new housing units.

Brockley Dogging Society said...

The sad truth is that we've been squeezed out :-( The BDS dislikes the new commenting system which is slow and only loads half the time. The BDS would like to see the old comment system, where pages loaded immediately, reinstated.

Brockley Nick said...

You seem to manage.

Max Calò said...

I spot a potential flaw in what you say in point 2. You say that if new properties weren't sold off plan to foreign investors then they wouldn't be sold at all and therefore they would never be built. Isn't it the case instead that developers would just have to sell for something less helping to contain the rise of house prices for new built?

Economic Migrant said...

The developer would still need cash buyers or an alternative source of credit as they require the money upfront to actually build the flats. Given that this price of credit would be higher than that provided by foreign buyers putting down large cash deposits then the price that the developer would need to charge for the flats would rise not fall.

Brockley Dogging Society said...

Just about, but it's all rather hard work, isn't it?

Max Calò said...

So assuming there's a good market and enough cash buyers or alternative sources of credit like for example government schemes to support the building industry with credit for first time buyers then one could dispense with foreign investors?

Tim said...

I don't think it really matters. Banning foreign investors probably breaks all sorts of international trade treaties. Fairly sure it can't be done.

Liberalise planning laws, more high rise. Less green belt. Crush Nimbys. Only way. Not gonna happen.

Economic Migrant said...

Why the obsession with foreign buyers? They buy a very particular type of London property and are not the cause of high property prices in the UK. The type of buyer that would be required was one that can put down a very large cash deposit years before they take delivery of their flat. I would doubt there are many like that in the UK. The government could offer support but such a scheme would have to be nationwide which would create pervese incentives for housebuilders as well as risk for teh general taxpayer. Why not just allow landowners to develop their own property as they see fit and let them accrue any profit which arises. Any gains would be taxed as per any other capital gain. Riskless to the taxpayer.

Brockley Nick said...

Not for me, it's a hell of a lot easier not having to spend half the day filtering spam and moderate ridiculous, abusive arguments (which, it turns out, were almost entirely the work of one troll).


Anyway, I thought doggers thrived in challenging environments. Think of this comment system as the roadside lay-by of social media.

SG said...

Don't ban them but tax them at the rate most American states do, and most EU countries do, and most Asian countries do e.g. Hong Kong recently introduced a 23% tax on foreign buyers to cool off the market and aid locals. The extra revenue raised is also used to build for locals.

SG said...

The area that brought the sub prime mess into the open in terms of wider press coverage was Thamesmead. Mass fraud and lies on income on mortgage applications.


Lies on loads were endemic all over. People in London weren't caught out to the same extent as the market didn't fall as much.

SG said...

Plus the 'substantial tightening' is only 2 weeks old. It was supposed to be introduced in 2013 but delayed. And tit can be circumvented by going for a buy-to-let loan not owner-occupier.

SG said...

Banks have expressly gone easy on those who over extended. This was to avoid panic and price drops. There has been policy of avoiding re-possession even if (sub prime) borrowers are far behind on payments.

PeoplesAssemblySEL said...

A reminder: Housing hustings is on tonight, 7.00pm, at the Albany Theatre, a nice venue, an interesting set of speakers, Joe Dromey, Chris Flood, Barbara Janiskewsca, & amongst Tory & Green speakers,( it's going to be live streamed, we'll post the link up when we get it). Housing is a big issue, the opportunity to easily quiz the candidates and people who might make a difference are few and far between. So do get down to the Albany if you can.

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