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>From a personal standpoint: I'm an above average earner but my quality of life in London is substantially worse than anywhere else I'd live (probably excluding San Francisco), we're coming towards a time where only the wealthy can live there, and the proles who actually do the hard work (cooking, cleaning, assistants, low-mid level employees) will need to be shuttled in from further afield.

I absolutely agree. I've personally noticed lots of people getting pushed out further and further due to rising costs of living. The situation we're in seems classist to an ever increasing extent. Directors, managers, people in finance etc all get paid enough to live comfortably, while even skilled workers in essential sectors are often not paid enough to live in a 1 bedroom flat within reasonable commuting distance.

For anyone wondering I did some Googling: average salary for a software developer in London is £43k (£32.6k after tax), and San Francisco is £77k (£52k after tax), about 60% higher. Cost of living in San Francisco is about 15% higher. This doesn't include healthcare or property taxes so take it with a grain of salt.

IMO it's not just rent that needs to go down, salaries need to go up. When I worked in a company that did client facing work they actively tried to hide our billable rates from us because it was so laughably higher than our actual salaries (about 20x, not including tax or huge amounts of unpaid overtime). A lot of people in skilled work are not comfortable with demanding pay rises and moving jobs if they don't get them, and a lot of un-skilled workers are not in the position to make such demands. That needs to change, far too much money gets funnelled not only to c-levels and directors, but out of the country entirely.

> salaries need to go up

+1

The UK still seems to have such a classist attitude. Anything 'unskilled' in London is barely above minimum wage, and some people would react in horror if they demanded any more than that.

See also: "How could train drivers strike when they earn 40k+. Nurses don't even earn that" - the problem is that nurses earn too little, not that the drivers earn too much. It sometimes feels like people here would rather pull everyone down to just above subsistence level, rather than supporting everyone doing better.

>For anyone wondering I did some Googling: average salary for a software developer in London is £43k (£32.6k after tax), and San Francisco is £77k (£52k after tax), about 60% higher. Cost of living in San Francisco is about 15% higher. This doesn't include healthcare or property taxes so take it with a grain of salt.

What. 77k? From what I hear on HN here everyone earning less than $150k as a software engineer in the US is selling themselves short.

> The reason I mention that is because I was nearly paying 1.3k/mo for someones basement room in 2011, that same room is now on the market for twice that, I can't imagine how anyone can be comfortable paying that much for such a basic accommodation.

In 2011 I was paying less than £800/mo for a stunning first floor bedroom in a beautiful Georgian house, 20 minutes south of the square mile where I worked at the time. Today, my wife and I pay a bit less than 2.6k for a large, modern all-round tip-top two bedroom in central Camden - it's a lot of money, for sure, but it's a far cry from someone's basement room.

Are there any particular reasons why you are not buying?

First, rental yields are actually very low in London, so it's not actually very expensive to rent vs. owning -- the benefit of owning comes from equity growth, and it seems prices are finally plateauing, so it's not an obvious investment, at least not for anything less than 10 years.

Second, the kind of place we'd actually like to live in is ~£1m, and we could probably only afford to buy at a bit more than half that. That might be sensible if we were in it for the long haul, but we're not, it's unlikely we'll stay in London long term, not the place we'd want to start a family.

Interesting, thanks - I am in a very similar situation.

Purchase prices of London properties rose much faster than rent. That's coming to an end now, there's a finite supply of people who can or will throw silly money at it. It doesn't mean that prices will come down, but it does mean purchase prices won't grow so fast and relentless as it did the past two decades. Rents may rise, but mainly to close the significant gap between rents and mortgage payments and that will only happen as fast as people are willing to pay.

It seems to me that house prices can be approximated as a function of rents, interest rates (determining required return on owning a house), and anticipated growth in house prices (which again can be decomposed into growth in rents, reduction in interest rates and 'irrational' growth).

Rental yields appear to be around 3.5% at the moment, which suggests to me that a good deal of anticipated growth is priced in. But where can that growth come from? Rents are a function of incomes and are unlikely to outpace inflation. Interest rates seem to be more likely to go up than down. So it seems that house prices are unlikely to rise, and once that is realized by the market, prices may even come down as participants stop anticipating growth just because "London house prices always go up".

House prices going up faster than rents in recent decades can probably be explained by interest rates being in a downward trend over the same decades. Now we seem to be in at least somewhat of a bubble due to irrational future growth expectations.

I think your example is significantly higher than average. I think £800-1000 per bedroom is standard for relatively nice places in zones 1-3 for 2+ bed places. For single beds it’s a bit higher, but not 2k+ unless you’re in a very fancy place.

Yes, I was referring to Zone 1-2 to be fair, and I understand that being more central is obviously more expensive, but as you move out to the more affordable areas you get locked into public transport. The less options there are for public transport the lower quality of life in general..

I am paying £3.500/month for a four bedroom flat in Zone 1 near Kensington Palace. It's a choice if you want to pay a lot for rent or less of rent and a lot for the public transport. But I am going to buy something

What is your occupation? Curious as to how you are managing to afford that rent while saving for a deposit.

I still think you were paying on the significantly higher end for what you were getting, unless you were living in The City, or had a pool in your building or something like that.

I expect that I probably pay about average. Most of my colleagues seem to be paying a little more than me. Some of my friends in lower paying jobs are paying much less than me.