ridiculous house prices

[zupermaus]

Originally Posted by academe

OP- I have a few comments and questions that I would appreciate if you would respond to.

First, I do think that your prices for some goods & services are taken from the extreme-end of the scale and serve to emphasize your point, rather than being a realistic portrayal of actual costs. For example, my experience buying groceries in the UK is that it can be quite affordable if you shop at places like Tesco. You're talking the equivalent of US Safeway prices (e.g., 89p or US$1.78 for a box cereal, etc.). The US$12 bunch of grapes may be had from an expensive "gourmet" supermarket or grocer, but certainly wouldn't cost that much at Tesco.

Second, the apparent cost is heightened by the very weak dollar. What I'm getting at (having lived on both sides of the Atlantic) is that £1 is treated more or less like US$1 in the UK, and the salaries and costs are scaled accordingly. If you're earning in £'s, the costs do not seem as exorbitant (although it is still very expensive living in London).

Third, it really depends on your frame of reference. OP - where do you live? I grew-up in Singapore, where property prices are more in-line with those in London. Also have lived in the San Francisco Bay Area, where - again - prices are similar (although a little lower) than London. For example, you could buy a 2-3 bedroom place in transitional area/bordering the ghetto in SF Bay Area for around US$600K-700K. In a more upscale neighbourhood like the Marina or Pacific Heights, you're looking at an average sale price of around US$2 million. In chic neighbourhoods in downtown Singapore, you're looking at 1-bedroom apartments that go for around S$1 million or ~US$700K. Bigger apartments (e.g., 3-bedrooms; approximately 300 sq feet) go for an average of US$4-6 million. Hong Kong, Tokyo and NYC are in a similar range.

Finally, other than emphasizing that it's expensive to live in major metro areas, what was the point of starting this thread?

Hey freedom of speech?
By OP I think you mean ZP?

fyi Yep I live in Windsor, on the outskirts of London, where the house prices are the same as the centre (thanks to a certain Liz Windsor living here too, bless er). I in my lifetime, and many of my acquaintances of the same generation, will never have a chance to buy a house at the current prices. Ten years ago I could have gotten a mortgage - just, -now its impossible to even apply for one with my wage ($30,000 p/a). My mother's house has gone up 10x its price since the 1980s. Thankfully the prices are dropping, the bubble has burst after about 10 years (on top of a bubble before that).

There has been such a crisis since about 2000 since all the 'vital workers' couldnt afford to live in London eg teachers, nurses, policemen, transport workers etc. The govt had to instate 'affordable housing' quotas for each new development (30-50%), with some areas where only these key workers are allowed to buy into. Their pay was also increased - London till then was facing a dearth as they were leaving in droves.

The extreme end of the house prices as you correctly point out are in West London, the worlds most expensive ground and rents. However the suburban prices were randomly taken from an estate agent's website, and are indicative of a middle class area - if I wanted to distort the thread I could easily have shown off Windsor prices (on a par with West Central London) as 'suburban' averages.

Btw the bunch of grapes are sold in Marks & Spencer. In the dept stores or organic eateries theyd cost more. Yep of course you can buy cheap in central London, but youll have to look for it, hard. Central London specialises only in small Tesco metros (crap selection, high prices), many people rely on convenience stores (terrible quality, high price), or are rich enough to afford the dept stores. Suburbanites have less of a problem with the supermarkets almost everywhere.

I however cannot change the price of a taxi, train service, cost of building etc for what they really are. They really are not 'extreme' cases, for a bunch of roses youd pay double for the extreme end of the market - $1000 not $500. there is so much I haven't mentioned either, from the cost of public services ($60 to change a lightbulb, $400 to move a painting, $40,000 design fees to convert a school toilet block) to the fact its cheaper for Brits to go to NYC to buy their laptops (as the air fare covers the amount saved). UK is known as the 'Treasure Island' among the multinationals, you can charge the earth here and people will still buy.

The problem with the celebrity obsessed UK is that many consumers equate higher prices with higher quality (which isnt the case), and are a slave to that. I could wax lyrical about the amount of money the average Brit spends on designer clothing, and the average amount of that that isnt even worn. In other words we happily pay, and the firms happily exploit. To build the entire Victoria line on the tube network took 7 years during the 1970s. To install a main escalator in the 1990s took 12 years, I kid ye not, charged per hour.

Sorry, rant over.


On that note prices are still high. I dont know if you know this but the UK house prices are dropping by about $1000 a week whilst fuel and food prices are climbing daily, with some items 40-100% more expensive than last year. Inflation is once again raising its ugly head.

 

[academe]

Thanks for this. By OP I meant "original poster." I was pushing you for a more in-depth response because I was curious to see what was motivating you to post, not because I was trying to censure you or bully you into silence. I thought a more interesting discussion could be had, if you expressed more of your thoughts/concerns. I'm glad that you were willing to share some of these thoughts with us. The problems and phenomena that you're describing are, sadly, common in many of the major metro areas in the world. The San Francisco area (which I am most familiar with having lived in the Bay Area for 10+ years previous to the UK) experienced a similar "flight" of key service personnel such as police, health workers, etc. In San Francisco city proper, the neighbourhoods have become really polarized because the middle-class have "flown" to the more affordable suburbs. The neighbourhoods left are increasingly split between either high income neighbourhoods, like Pacific Heights or the Marina, where median/mean incomes probably run in the US$200K++ (£100K++) range, or lower income neighbourhoods that border on becoming urban slums (e.g., Bay View-Hunters Point, the Tenderloin, etc.), with (by UK standards) shockingly high levels of gun violence and other serious crime. What do you think has driven up the property prices in London in the past? In San Francisco, Berkeley, Singapore and other places that I've lived, most of the growth in prices seems to have been driven by increased affluence of a relatively small proportion of population - largely professionals in business, finance, etc who reaped a windfall when times were good. Property speculators and "flippers" have contributed to this balloon, too. That said, I'd rather live in the UK than in the US. The British government, for all its faults, is actually responsive to the needs of the people. In San Francisco, friends that I know who work in advocacy for the homeless or for affordable housing are constantly frustrated by how little state and local government do to alleviate the needs of the urban poor. If you go to San Francisco, you would be shocked at the number of homeless on the street. They may get fed, but they don't get the psychological services they need or housing. Getting money to build affordable housing or to set aside areas of affordable housing (as you describe happened in London) is like squeezing blood from a stone. Your money also doesn't go very far in the US... Many of our middle and upper income friends spend a fortune on private education for their children in urban areas ($30K/year/child or ~£15K/year/child) because the public schools are terrible. Health care is expensive; I think it costs ~$300/month for each spouse or child (~£150), if your company isn't paying it.

This gets worse as you get older. Some of our friends in their later years have been almost bankrupt by the cost of major operations.

Originally Posted by zupermaus

Hey freedom of speech? By OP I think you mean ZP? fyi Yep I live in Windsor, on the outskirts of London, where the house prices are the same as the centre (thanks to a certain Liz Windsor living here too, bless er). I in my lifetime, and many of my acquaintances of the same generation, will never have a chance to buy a house at the current prices. Ten years ago I could have gotten a mortgage - just, -now its impossible to even apply for one with my wage ($30,000 p/a). My mother's house has gone up 10x its price since the 1980s. Thankfully the prices are dropping, the bubble has burst after about 10 years (on top of a bubble before that). There has been such a crisis since about 2000 since all the 'vital workers' couldnt afford to live in London eg teachers, nurses, policemen, transport workers etc. The govt had to instate 'affordable housing' quotas for each new development (30-50%), with some areas where only these key workers are allowed to buy into. Their pay was also increased - London till then was facing a dearth as they were leaving in droves. The extreme end of the house prices as you correctly point out are in West London, the worlds most expensive ground and rents. However the suburban prices were randomly taken from an estate agent's website, and are indicative of a middle class area - if I wanted to distort the thread I could easily have shown off Windsor prices (on a par with West Central London) as 'suburban' averages. Btw the bunch of grapes are sold in Marks & Spencer. In the dept stores or organic eateries theyd cost more. Yep of course you can buy cheap in central London, but youll have to look for it, hard. Central London specialises only in small Tesco metros (crap selection, high prices), many people rely on convenience stores (terrible quality, high price), or are rich enough to afford the dept stores. Suburbanites have less of a problem with the supermarkets almost everywhere. I however cannot change the price of a taxi, train service, cost of building etc for what they really are. They really are not 'extreme' cases, for a bunch of roses youd pay double for the extreme end of the market - $1000 not $500. there is so much I haven't mentioned either, from the cost of public services ($60 to change a lightbulb, $400 to move a painting, $40,000 design fees to convert a school toilet block) to the fact its cheaper for Brits to go to NYC to buy their laptops (as the air fare covers the amount saved). UK is known as the 'Treasure Island' among the multinationals, you can charge the earth here and people will still buy. The problem with the celebrity obsessed UK is that many consumers equate higher prices with higher quality (which isnt the case), and are a slave to that. I could wax lyrical about the amount of money the average Brit spends on designer clothing, and the average amount of that that isnt even worn. In other words we happily pay, and the firms happily exploit. To build the entire Victoria line on the tube network took 7 years during the 1970s. To install a main escalator in the 1990s took 12 years, I kid ye not, charged per hour. Sorry, rant over. On that note prices are still high. I dont know if you know this but the UK house prices are dropping by about $1000 a week whilst fuel and food prices are climbing daily, with some items 40-100% more expensive than last year. Inflation is once again raising its ugly head.

 

[Dandy Highwayman]

The only conclusion I can draw from this thread is '**** London.' None of those houses are worth a fraction of what what they cost. This is insane.

 

[visionology]

All expensive property isn't necessarily owned by rich people. If people bought the property when it was reasonably priced they are more a product of circumstance than being the elite wealthy.

I've seen that a lot here in CT, many areas of fairfield county have skyrocketed in prices due to their proximity to NYC. A good number of those people lived there well before this boom and scooped their properties up at normal prices. These are for the normal sized expensive homes, not the giant mansions and such.

 

[briancl]

I have a friend who bought a place in Paddington last year, just a couple blocks from the tube station. It seems like a fine location to me, and he got a 2bdrm for 500k (GBP). He is on the top floor and is in the middle of planing a conversion to knock out the roof and build 2nd floor, so he'll end up with a 3bdrm, 2bath, with large living area and large eat-in kitchen. I don't think that is a terrible deal. Compared to Chicago, yes.. it is high, but it's apples and oranges.

 

[academe]

Originally Posted by briancl

I have a friend who bought a place in Paddington last year, just a couple blocks from the tube station. It seems like a fine location to me, and he got a 2bdrm for 500k (GBP). He is on the top floor and is in the middle of planing a conversion to knock out the roof and build 2nd floor, so he'll end up with a 3bdrm, 2bath, with large living area and large eat-in kitchen. I don't think that is a terrible deal. Compared to Chicago, yes.. it is high, but it's apples and oranges.

I think you're right. If you have the income to live in London it is more expensive than comparable high-density metros like NYC, San Francisco, Paris, Rome, Singapore, Hong Kong (may be not Tokyo)...but not by much. In the chic Orchard Rd district in Singapore (where I'm originally from), you're looking at S$1 million (£370K) for a 1 bedroom; larger 2 or 3 bedroom apartments are going for ~S$6-8million (£2-3 million)... Houses are likely in the 10s of millions (if you can find one). In comparison, Scotland is cheap! Unless you have the income, your quality of living is going be fairly low in London (or, NYC, Rome, etc.) for that matter.

 

[billiebob]

So in general, what's the income tax rate for someone earning $200K in London with no kids? I can really see the impact of not needing to spend 30K/year for daycare, high school, college and having free healthcare, but what are taxes like?

In NY for example I would guess someone earning 200K would have 31% federal, 5% state, and 3% local, then 7% FICA/MED deduction for approx take home pay 60% of base.





In Canada, for example, sales taxes are 14% on top of whatever other taxes they have.

 

[academe]

The UK Tax Bands for 2008-2009 are as follows:

£0-36,000: 20% income tax
£36,000+: 40% income tax

VAT (sales tax): ~18.5%

I may be off here a little bit (I'm going on my own income, and I'm in the lower tax band

), but once you include your National Insurance and pension contributions were talking about ~10% additional income tax? I'm guessing that someone earning £100K is probably paying around 50% tax (including National insurance and pension plan). So based on your comparison, probably 10% more than in NYC?

Keep in mind that hotshot City bankers also get year end bonuses, etc. etc. on top of their basic salary.

Originally Posted by billiebob

So in general, what's the income tax rate for someone earning $200K in London with no kids? I can really see the impact of not needing to spend 30K/year for daycare, high school, college and having free healthcare, but what are taxes like?

In NY for example I would guess someone earning 200K would have 31% federal, 5% state, and 3% local, then 7% FICA/MED deduction for approx take home pay 60% of base.





In Canada, for example, sales taxes are 14% on top of whatever other taxes they have.

 

[billiebob]

Originally Posted by academe

The UK Tax Bands for 2008-2009 are as follows:
£36,000+: 40% income tax
VAT (sales tax): ~18.5%


Wow. That's even higher than I thought.

 

[montecristo#4]

Originally Posted by imageWIS

Why John, why the understatement?

Jon.

Because if he used the word "rich", it would mean the guy is making over $100,000 per year.

 

[academe]

Originally Posted by billiebob

Wow. That's even higher than I thought.

Without a doubt. Although I am glad that I actually receive services for my taxes and won't have to worry about my retirement, my children's education, getting health care, or being injured/killed by gun violence.

 

[VKK3450]

Originally Posted by zupermaus

bunch of grapes, $12
entry to a nightclub on Saturday (and 500,000 happily pay), $40 ($20-30 any other night)
cocktail, $24
single rose $10, bunch of roses $500

A lot of your prices are on the high end and paint the wrong picture. Sounds like you have been reading too much of the Daily Mail.

I live in central London (well as central as most anyone, very few live in The City / Soho) and a bunch of grapes does not cost 6 quid. Actually about half that at Waitrose which is on the higher end of supermarkets

12 pound cocktails? Maybe at Sketch or the Charlotte St hotel, but I drink regularly at Milk and Honey and dont really pay over 8 quid for a double of whatever I am drinking.

Pints of beer are between 3 and 3.5 quid. From what I have seen in the "How much do you pay" thread that I started, this is not too far off what you might pay in the US when you factor in tipping, tax, etc...

The club prices you quote are for places like Fabric or some of the Mayfair joints. Not really indicative of normal life. Pubs and most bars don't charge cover or it will be 5 pounds max.

I buy flowers on a weekly basis (the gf likes having them in the house), and I have never had to pay 250 pounds for a dozen roses. The florist on Baker St in Marylebone (a nice area) charges about 15 max. Usually I pick something up for about a tenner. Thats Marylebone, not Hackney or Borough or something.

Originally Posted by zupermaus

Btw the bunch of grapes are sold in Marks & Spencer. In the dept stores or organic eateries theyd cost more. Yep of course you can buy cheap in central London, but youll have to look for it, hard. Central London specialises only in small Tesco metros (crap selection, high prices), many people rely on convenience stores (terrible quality, high price), or are rich enough to afford the dept stores. Suburbanites have less of a problem with the supermarkets almost everywhere.

($60 to change a lightbulb, $400 to move a painting, $40,000 design fees to convert a school toilet block) to the fact its cheaper for Brits to go to NYC to buy their laptops (as the air fare covers the amount saved).

There are supermarkets in many of the areas of London such as the Waitroses in Marylebone, Clerkenwell and Swiss Cottage where a bunch of grapes is much more reasonable. There are also alot of greengrocers, fishmongers, butchershops and bakerys where one can purchase high quality ingredients (yes, prices are higher than the US, but not in line with the price of grapes that you are quoting). Also, Tescos/Sainsburys/Waitrose offer home deliver all across London with the same prices as in the larger stores. I order online and for a 5 pound delivery charge they will carry arry all my beer, wine, bottled water, grapes, etc up my stairs and into the kitchen. To say that people only have access to overpriced boutique food or convenience stores is totally incorrect.

Over the past few months I have had workmen in to do a number of things including hang a 1.5x1 meter framed mirror, and that cost me 30 pounds, not the 200 ($400) you are quoting.

My girlfriend is in Boston as I type this, and in fact bought a new laptop just yesterday. While it was cheaper than in London, it did not come close to covering the cost of her flight (the company covered it).

With online shopping all of these prices can be checked. Look at Bestbuy, PC World, Waitrose, Tesco, Sainsburys...

But yes, house prices are absurd. I grew up in a quite affluent part of Atlanta and for what I pay for a 2 bedroom place in Primrose Hill I could have a 4-5 bedroom house with a 2-3 car garage on upwards of an acre of land near the country club in the ATL.

But if I was making the comparison between Atlanta and London then... hey, thats an entirely different story...

Originally Posted by academe

Without a doubt. Although I am glad that I actually receive services for my taxes and won't have to worry about my retirement, my children's education, getting health care, or being injured/killed by gun violence.

Nah, you just have to worry about being stabbed these days...

K

 

[VKK3450]

Just had a look at Waitrose (ocado) and a 500g bunch of grapes is 2.39 ($4.80). Waaaaaaaaaaaay less than your 12 dollars a bunch
And Waitrose is a more expensive supermarket than Tesco or Sainsburys.

Prob still more expensive than the US, but everything is

K

 

[MichaelE]

I would hate to see where the blue collar and the poor live.

I guess I'm not retiring to the UK.

 

[academe]

Originally Posted by VKK3450

Just had a look at Waitrose (ocado) and a 500g bunch of grapes is 2.39 ($4.80). Waaaaaaaaaaaay less than your 12 dollars a bunch And Waitrose is a more expensive supermarket than Tesco or Sainsburys. Prob still more expensive than the US, but everything is K
I think it's only more expensive than the US if you're living outside of a major metro area. If you're in San Francisco, NYC, Chicago, the prices are comparable to what you're quoting. In the SF Bay Area, I paid up to $6.99/lb (1lb ~ 500g) for grapes from higher-end supermarkets like Whole Foods. You might be able to find them for $2.99-3.99/lb at less expensive supermarkets...