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by lmt55 1516 days ago
I own a house in London. Its total value increase since I bought it 5 years ago is much less than my salary.
3 comments

You bought near the peak of the market then. Definitely been some downward pressure on prices since covid as people sold up in London, took that premium price and moved to larger properties elsewhere. Not saying it was a bad investment, just that the return will take longer than it has in the past.
It doesn't matter where I bought. If I haven't made much money in the last 5 years, nor has anyone else (on average), regardless of how long they've owned their property.

The suggestion that 'the return will take longer than it has in the past' is a prediction with no evidential basis.

Isnt that exactly the scenario that op is describing?

Lack of flexibility at precisely the right time?

Owning in any large city + servicing debt during the pandemic when you must move elsewhwre that is sane (and less risky to your health) would seem to have a premium attached to it

Then I guess your salary is amazing, because many house prices across London have doubled in 5 years.

If you somehow bought a house at a reasonable earnings multiple, say 4x earnings, then your house has appreciated essentially what you earned over the last 5 years. This is just math.

Can you tell me an area where average house prices have doubled in the last 5 years? I can't think of one. Most expensive areas have gone sideways since Brexit, and risen a bit since the pandemic. Most cheap areas have grown slowly since Brexit.

https://www.bloomberg.com/graphics/property-prices/london/ shows the median as having gone up around 6% in total since 2017. Trying a mix of neighbourhoods in that tool, I can't see any which are close to 100% up.

Me and my partner are looking for a house in zone 3-4 right now, and I can tell you that every single home we've looked at is on for an asking price (and they're selling) of between 50-100% more than they last sold for 5 years ago.

We looked at a home that sold for £415K in 2017 for example and we were outbid. It went for 865K

Flats aren't so hot, that's for sure, but there's been masses of price growth over the last 5 years on houses. There's a stunning lack of stock on the market.

Berlin prices has been growing at crazy speeds, it might have doubled the last 5 years. Even with a lot government intervention(rent raises cap etc).

The situation is so bad that there isn't even housing stock available. You are generally better off moving out or buying whatever you can.

London Prime Property: Our forecast for growth of 24% in the five years to 2026 means that by the end of the period, values will return to their previous 2014 peak level for the first time. [0]

[0] https://www.savills.co.uk/research_articles/229130/323909-0

12 Years underwater... optimistically given that its already not looking great for their 8% prediction for 2022

I mean the folks that bought homes in Detroit in 1960 probably feel a bit different in 1980.