It's city bonuses and buy-to-let that is to blame.
Buy to let is really only attractive with large capital gains: The rental yield is pretty rubbish and is probably only just enough to cover the mortgage repayments, but when combined with 10-15% growth a year in the housing market every year, it is a spectacular investment - especially if you have the minimum amount of capital possible actually tied up in the property. If you meet the mortgage interest from the rent, you then trouser 15% growth on about 80% of the value of the property you've borrowed.
Doesn't work nearly so well without house-price inflation though. Not unless you sit it out for the long term.
Needless to say, I suspect that a lot of city bonuses go into buy-to-let property.
Agreed
Buy to let is really only attractive with large capital gains: The rental yield is pretty rubbish and is probably only just enough to cover the mortgage repayments, but when combined with 10-15% growth a year in the housing market every year, it is a spectacular investment - especially if you have the minimum amount of capital possible actually tied up in the property. If you meet the mortgage interest from the rent, you then trouser 15% growth on about 80% of the value of the property you've borrowed.
Doesn't work nearly so well without house-price inflation though. Not unless you sit it out for the long term.
Needless to say, I suspect that a lot of city bonuses go into buy-to-let property.