The situation is completely insane. For example, Cambridge used to be a relatively affordable place. Now, rents for 1 bed 50 m^2 flats are in the range of, at least £1200 per month (climbing at a rate of ~£100 / year).
It's sad, because it's a good place to do science in, but everything is really expensive. I come from Scandinavia, and things work much better there and are miles ahead in terms of affordability.
Cambridge is an excellent example of what's wrong with the UK housing market at the moment. What we need is a range of homes with enough availability to support a range of buyers. What we're getting is super-expensive flats (often with 7-figure prices or close to them) in the city centre aimed squarely at London commuters, combined with new estates built around the edge of the city. New estates typically have conditions attached to their planning consent about providing a certain amount of so-called affordable housing. In reality the developers seem to be able to build the high-end and most profitable houses first, drip-feed them into the market to maintain high prices, and somehow never quite get around to building and selling all the mid- to low-end property that was supposed to be part of the deal.
Until the government changes planning policy to be realistic, such that it's economically attractive for the big homebuilders to build at about twice the rate they are doing at the moment, or it's economically viable for individuals to buy a plot of land and get their own house built as more commonly happens in continental Europe, or both, no amount of tinkering around the edges is going to do anything particularly useful. Schemes like Help to Buy just pump money into the existing system, without actually generating much new housing stock. Token tax rises on second homes bought for letting out won't do anything either, as they'll just get passed on to the tenants through higher rents. And even if they didn't, many UK homes "earn" more than the people living in them, so taking a 3% hit on stamp duty is basically pocket change to professional landlords.
The bottom line is that what we need is lots more homes, but since any change in policy that brings that about will hurt the values of existing homes and/or the profits of the big homebuilders, it seems unlikely we'll see any meaningful change in this direction as long as the Tories are in power. That said, for a variety of reasons I wouldn't bet on the Tories still wielding much practical power in government by the end of the current five-year administration, and housing is the kind of issue that could come back to bite them at election time if we do see another 3-4 years of huge price rises between now and then.
Yes, it's a sad situation. In Scandinavia I was always renting houses from people that had moved abroad, or switched countries for a while. Here it's always investors, who are feeding the bubble.
Not sure Scandinavia is a good example of effective housing policy. Sweden and Stockholm in particular has one of the most severe current housing bubbles in the world. Housing prices have far outpaced GDP growth for several years.
Huh? I'm currently renting in a 1 bed 50sqm flat in Cambridge for £750/mo (up £25 over the past year). The only thing I can think is that you're only talking about really central properties? But Cambridge isn't that big, it only takes me 15mins to cycle to the centre.
You really shouldn't buy a house with less than 20% down in the US, either. It's just that some banks have looser financing (and higher interest) to allow 15% or 10%, and there are government programs that subsidize first-time home purchases to allow a 3.5% down payment.
FHA 3.5% for the win. I went from paying $1300 in rent for one unit in a duplex to paying $1800 in mortgage/insurance/taxes for the entire duplex, and I get to charge the $1300 for the other unit. It's a no-brainer.
My buddies in middle-America were capitalizing heavily off of both the FHA and the incredibly low interest rates circa 2011 (thanks artificially depressing the dollar, Fed!). They started out with a handsome amount of capital and borrowed against their 401(k) [I don't recommend this] to speculate on the rise of land [I also don't recommend this], threw down 20% to avoid PMI [I do recommend this, if you can afford it] and started renting out properties. They essentially speculated on gentrification, got lucky, and pay a management company to maintain their properties so they don't even deal with their tenants. Their bi-monthly involvement is limited to reconciling their accounts for 20 minutes and a five minute phone-call to resolve any potential outstanding issues with the management company.
> Compare to London, where the average deposit needed to buy a first home is £91,000 ($130,000) -- 25% of total price
The deposit required is more like 5-10%. I think a 25% deposit is pretty rare for a first time buyer. Of course this still means you need the income to afford the huge mortgage.
Are you getting confused with the average deposit used by purchasers?
I'd say the majority of the people renting in Cambridge are from academia, and they cannot afford decent flats. This is quite absurd, because there's plenty of space. Cambridgshire is all marshland and low-value farmland.
I was referring to the Copenhagen area in particular.
It's a nice balance between salaries and house prices. Malmö is even better. Since housing is usually taking the majority of your income, this has a huge impact on the quality of life.
As a postdoc, you can easily buy a house in Copenhagen. Or you can rent, at it's barely 1/3 of your salary. In Cambridge, an equivalent flat is more like 1/2-3/4 of your salary.
Also the rental market in the UK is really wacky with regards to tenant protection.
Malmö is cheaper because you get to "live" in Malmö, which I could never recommend to anyone, especially jewish or gay.
Yeah but at least the UK got a rental market, think about it.
Stockholms market is scattered and hard to come by without connections or help. But not only that, most people who rent out their apartments in Sweden will either go through the Co-op board and only get a year, or do it under the table, both situations adds a lot of insecurity to the tenant.
In Singapore, there is a broad market from super cheap and shitty, to super expensive and amazing.
Having a broad, free market helps consumers a lot more than having it closed down for a queue-system.
Sure, I can get a closet space with no air condition and no kitchen for a 1/5, or I can pay 3/5 and get a condo, at least there is a choice.
I can't speak for rest of Scandinavia, but I know in Stockholm that choice doesn't exist. You're forced to buy.
I don't think renting is better in CPH than in Stockholm. Right now I'm paying 10.000DKK (1500USD) for a one bedroom apartment, not in the center (NV). It was the only option that didn't involve any shady stuff like no-contract or not being able to register myself in the apartment. Most of my friends live doing one of those, or renting a room for around 5.000DKK (750USD).
That's a lot. I was renting in the northern suburbs (Holte-Virum-Birkerød) and I got very nice 2 beds for 5000-7000 DKK with excellent landlords. UK on the other hand...
It's sad, because it's a good place to do science in, but everything is really expensive. I come from Scandinavia, and things work much better there and are miles ahead in terms of affordability.