Is it safe to buy my first home near London at this time?

Dxhawk

My wife and I have been renting for around 10 years and would love to buy. We would need to go for a 95% morgage as do not have enough deposit for anything else and looking at 2/3bedroom house or flat in South/South East London.

Biggest fear I have is ending up in negative equity due to the ecomomic issues, and also have to consider job security etc too.

What are peoples opinions on buying at the moment?, would you or would'nt you? How dangerous is it at moment?

phill99

Location is irrelevant. Job security and negative equity are affecting he whole country.

Gentoo365

It is always a risk to buy a house with a small deposit.

My personal opinion is that it is better to save until you have at least 10% deposit (plus an extra £5000 or so for legal fees and unexpected expenses).

Don't look at trying to beat the market. London has done o.k. and there will always be a market for properties there. However there will be fluctuations between different areas.

Instead look at your situation. Would you be willing to buy somewhere now and commit to living there for up to 10 years?

Regarding job security, I would actually be less concerned about that if I lived in London, as that is where most of the work I could do is located.

Don't be too concerned about the future. It's not all going to be bad. Just be realistic about what you can afford and don't put yourself into a position where you are spending all your salary on mortgage interest and cannot save any more.

Gentoo365

phill99 wrote: »

Location is irrelevant. Job security and negative equity are affecting he whole country.

I disagree.

The South East has in the main got off very very lightly. The private sector has already competed most of the downsizing and cuts and it seems that in some areas jobs are available for people who have the right skills.

The areas that are going to be very badly hit are those that depend on public sector employment. As those cuts will be slow and it will take time for the full effect to be seen.

As an example. I would much rather be jobseeking in the South East than be jobseeking in the North East.

Kynthia

Gentoo365 wrote: »

I disagree.

The South East has in the main got off very very lightly.

Yet I still know people who are in negative equity, who's properies have dropped 10-20% since 2008 and who take months to find a job and this is in Greater London. Therefore job security and a large deposit are very important. I would suggest waiting until you have enough for a 10% deposit plus fees. Also I would buy somewhere big enough to have a spare room you could rent out to a lodger and avoid buying a leasehold property that prevents you letting the whole thing, just in case.

Turnbull2000

Can't comment on job security, but I wouldn't really worry about negative equity in London. Gentle price rises will probably be the bare minimum over the next few years.

amcluesent

I'd be worried that if you buy on price then the area may be on a downward spiral into HMOs and slum landlords. 'Gentrification' is critical in London.

brit1234

London is a bubble on a bubble it is going to pop at some time. My best bet is going to be after the Olympics starting in the Eastern side. On top of that the foreign safe haven money will stop at some time. Much of it ist now going into Germany but a fair bit is still coming to London.

Its clearly a ticking time bomb, best advice is to keep saving that deposit.

GDB2222

Government policy seems to be to prop up house prices, as otherwise the banks are in deep(er) trouble. I would expect prices to stay roughly level in absolute terms, with a slow decline in real terms as inflation eats away. However, a 5% deposit is almost no margin against negative equity.

So, your question: 'Is it safe?' - who knows what will happen, you may be absolutely fine, but it's certainly NOT safe. (So, leave the diamonds in the bank, doctor.)

nollag2006

brit1234 wrote: »

London is a bubble on a bubble it is going to pop at some time. My best bet is going to be after the Olympics starting in the Eastern side. On top of that the foreign safe haven money will stop at some time. Much of it ist now going into Germany but a fair bit is still coming to London.

Its clearly a ticking time bomb, best advice is to keep saving that deposit.

Poor old brit

You have predicted the "bubble" would fall 50% by Christmas 2009, then by June 9th 2012, and I see you are elsewhere claiming that house prices would be down 20-30% by Christmas this year.

You are on record on this forum as ploughing your savings into gold last August - a mistake of magnificent proportions!

You clearly have little idea of economics.

nollag2006

Dxhawk wrote: »

My wife and I have been renting for around 10 years and would love to buy. We would need to go for a 95% morgage as do not have enough deposit for anything else and looking at 2/3bedroom house or flat in South/South East London.

Biggest fear I have is ending up in negative equity due to the ecomomic issues, and also have to consider job security etc too.

What are peoples opinions on buying at the moment?, would you or would'nt you? How dangerous is it at moment?

Buying is far far cheaper than renting in London:
http://uk.finance.yahoo.com/news/buying-is-cheaper-than-renting.html

With rents and London house prices rising, and interest rates staying flat it's only going to get worse.

If you see something you like, go for it!