Nervous about buying in London - advice needed

SG27

"Historically, that hasn't been the case. London's population was actually shrinking until the mid-90s. Prices were falling. My boss bought her flat 20 years ago. She and her husband were in the early stages of their professional careers. They were earning £15k each. The flat cost £60k, or four times their individual salaries. The same flat is now valued at over 20 times my salary. This cannot be sustainable in the long term. I'm hoping it's sustainable in the medium-term."

The only way that could possible have happened is the silly mortgages I mentioned in the last post. And like I say these we never come back. No one knows the future but I don't see how prices can rise anymore or to be even stay where they are.


One thing to consider is this: we fully expect to 'lose' money on our Essex house when we sell in 7 to 10 years. But we will be upsizing so if for example our house falls 20% then so does the bigger more expensive house so it will actually be cheaper for us to move. As long as you have a decent deposit then house prices falls are good if you want to upsize.

Hillbilly1

rainbow_carnage wrote: »

Thanks for this.

We're looking at the Harringay Ladder (cheaper than Stroud Green). We're also considering the cheaper bits of Finchley, though we don't know the area as well. A friend just bought a place in Kentish Town, but it's outside of our budget. Depending on which mortgage calculator we use, I think we can do £250-300k. Any suggestions would be much appreciated.

Can I presume current residence is in Muswell Hill??

What would you like from new place? Garden, parking, close to transport - where do you commute to? How many beds?

Oh, and Kentish Town is poop hole...

rainbow_carnage

sinbad182 wrote: »

Look at it as a place to live and a long term investment, and don't worry about short term fluctuations.

Thanks for your advice. We're definitely looking at it as a place to live, rather than an investment, but we're not planning to live there long-term. We cannot currently afford to buy in an area with good schools. Nor can we afford a family-sized home. We're hoping to start a family in the next year or two. By the time the kid(s) reach school age, we'll have to move. Hopefully by that time, our salaries will allow us to buy something better. But not if we find ourselves in negative equity.

SG27 wrote: »

I don't think what happened over the last 10 years will ever happen again. The only way prices got so high compared to salaries was but stupid 10x wages 100% and self cert mortgages! This isn't going to happen again.

That was certainly part of the problem, but it's naive to think that it was the sole cause, or that it won't happen again. This is not the first, nor the last, property boom.

It's now been several years since those types of mortgages have been available. Prices have continued to rise. One reason is that foreigners have been buying property in London as a safer investment than in their home countries. This has pushed up prices at all points on the spectrum. Similarly, landlords have been buying overpriced flats and renting them out. Renting is still more expensive than buying.

SG27 wrote: »

Its a big difference when you renting though. The only way I managed to save so much is that I still live at home so my rent is very cheap just £50 per week. That's how we have saved so much. But in hindsight, saving these 8 years was absulotley the right thing to do and if wasn't for the fact that I'm now 30 and want to make home with my fianc! I would save for another 5 years and buy mortgage free!

I'm glad that's worked out for you, but it's not an option that's open to most people, or one that they'd consider. My parents live overseas, but even if they lived in London, I would not live with them. I'd like to think of myself as an independent adult, and part of that is standing on my own two feet.

Hillbilly1 wrote: »

Can I presume current residence is in Muswell Hill??

What would you like from new place? Garden, parking, close to transport - where do you commute to? How many beds?

Oh, and Kentish Town is poop hole...

We live in Stroud Green, which is now apparently more expensive than Crouch End. We're looking for a two-bed within easy commuting distance of central London (Bloomsbury). So anything on the Northern, Piccadilly or Victoria lines. Outdoor space would be nice, but it's not a deal-breaker. We don't drive, so we don't need parking.

Archway is a possibility. We've also lived in Stokey, but the lack of tube would be a problem. A coworker keeps pushing Walthamstow, but the last time we went there, it was a real hole. I think it'll take more than five years before that's a decent place to live.

Hillbilly1

Cool - gives me some reference. I should be finishing teacher training essay while OH does DIY... but you know, if a fellow North Londoner needs me!!!

I would second the E17 bit. It is often mentioned on here, and we lived there before movinh North. FOr what we have here (1 bed garden flat N10) we would have a big house in E17...
when we left (2005ish) there were big plans, but none havecome to fruition. I now drive around the area for work and am saddened there have been little to no improvements to be seen - well excpet the Travelodge on top of the tube station! The Village area is nice, but really restricted to a few streets and 10-15 mins to tube.

Hillbilly1

I think the ladder is really expensice for what it is have yo considered the other side of the road above Wood GReen tube. Nice little street son houses/maisonettes and you would not need to spend your whole budget, unless you wanted a 2-3 bed house!

http://www.rightmove.co.uk/property-for-sale/property-35902111.html?backListLink=%2Fproperty-for-sale%2Fmap.html%3FlocationIdentifier%3DUSERDEFINEDAREA%255E%257B%2522polylines%2522%253A%2522y%257B%257CyHfjYsaAtf%40%257Dd%40hRuAgCkBa%255DT_k%40hBeP%257EH%257BZrGyY%40a%255D%257E%40c%255E%257Cn%40a%40hj%40jSiXmc%40%257ETglAhlCpaAjXhfAk%2560Dbt%40iFvv%40%2522%257D%26sortByPriceDescending%3Dfalse%26maxPrice%3D325000%26minBedrooms%3D1%26retirement%3Dfalse%26partBuyPartRent%3Dfalse%23_includeSSTC%3Don%26auction%3Dfalse%26locationIdentifier%3DUSERDEFINEDAREA%255E%257B%2522polylines%2522%253A%2522y%257B%257CyHfjYsaAtf%2540%257Dd%2540hRuAgCkBa%255DT_k%2540hBeP~H%257BZrGyY%2540a%255D~%2540c%255E%257Cn%2540a%2540hj%2540jSiXmc%2540~TglAhlCpaAjXhfAk%2560Dbt%2540iFvv%2540%2522%257D%26maxPrice%3D325000%26minBedrooms%3D1%26partBuyPartRent%3Dfalse%26previousSearchLocation%3DUntitled%2520(Drawn%2520Area)%26radius%3D0.0%26retirement%3Dfalse%26searchLocation%3DUntitled%2520(Drawn%2520Area)%26searchType%3DSALE%26sortByPriceDescending%3Dfalse%26useLocationIdentifier%3Dfalse%26box%3D-0.11552%2C-0.08677%2C51.58977%2C51.59972%26popupPropertyId%3D35902111&fromMap=true

Oopps - long link...

All around here have the tloiet off the kitchen. You would have the money to move bathroom to silly second bed, have reception and bedroom as nice size doubles and then extend kitchen cupbaords into old bathroom space and dining room becomes sitting room. Less than 10k to make a really nice job of it. Under budget, own front door and garden as a bonus!

carefullycautious

What about this

http://www.rightmove.co.uk/property-for-sale/property-35791243.html?premiumA=true

kidmugsy

Suppose the Great Financial Crisis resumes and The City lays off workers in droves. Are London prices bound to continue rising?

rainbow_carnage

Thanks for the suggestions. We hadn't really considered Wood Green. The area close to the tube is awful. There are nicer bits further away, but they add an extra 15-20 minutes to the commute. Might as well buy further out, but closer to a tube station. Turnpike Lane is a possibility. Might end up renting there if we can't buy.

kidmugsy wrote: »

Suppose the Great Financial Crisis resumes and The City lays off workers in droves. Are London prices bound to continue rising?

I don't think I'm competing for the same properties as City workers, but your point is still valid. I'm less concerned about another major crisis than about a shift in the global centres of finance. These things go up and down. Today it's London and New York, tomorrow it's Beijing. It feels a bit like London is at a peak now, which is not a great time to be buying a home.

Berislav_Zlokovic wrote: »

5 years is a short time-scale when the market looks like a bubble. You could easily be out the money for a decade or more. There are forces which could depress prices -

1) Cap on HB, so London councils move renters on benefits to Peterborough etc. reducing demand
2) Mansion tax obliges peeps on fixed income to sell increasing supply
3) Euro stabilises so less money seeking security
4) More civil servants moved to North East etc
5) More regulation on financial services reduces employment
6) 'Call me Dave' Dave cracks down on immigration in doomed attempt to win 2015 election

Again, those are definite possibilities. So, the question remains: what do we do? Do we continue to throw away money on a rented property that costs more each month than mortgage repayments? Do we buy and hope that the price won't fall by more than what we would have paid in rent over that time? Do we try to share the risk by going with something like this: http://www.castletrust.co.uk/mortgages--2/what-is-a-partnership-mortgage? Do we consider shared ownership (resales, not new builds)?

System

Assuming in 5-7 years the outcome for you was not negative, where would you buy to give your then children a better chance in life?

katejo

rainbow_carnage wrote: »

Thanks for the suggestions. We hadn't really considered Wood Green. The area close to the tube is awful. There are nicer bits further away, but they add an extra 15-20 minutes to the commute. Might as well buy further out, but closer to a tube station. Turnpike Lane is a possibility. Might end up renting there if we can't buy.



I don't think I'm competing for the same properties as City workers, but your point is still valid. I'm less concerned about another major crisis than about a shift in the global centres of finance. These things go up and down. Today it's London and New York, tomorrow it's Beijing. It feels a bit like London is at a peak now, which is not a great time to be buying a home.



Again, those are definite possibilities. So, the question remains: what do we do? Do we continue to throw away money on a rented property that costs more each month than mortgage repayments? Do we buy and hope that the price won't fall by more than what we would have paid in rent over that time? Do we try to share the risk by going with something like this: http://www.castletrust.co.uk/mortgages--2/what-is-a-partnership-mortgage? Do we consider shared ownership (resales, not new builds)?

I'd rather have a 2 bedroom flat or preferably terraced house (within your 250K budget) in E17 than a shared ownership anywhere. I see that you don't think much of E17 but for a first buy, there is far worse (Tottenham, Barking, ...)
When i was looking for my first place, I was living near Muswell Hill. I soon realised that N10 (including Crouch End in N8) were too expensive for me. I did make offers on flats in the Harringay Ladder area but they fell through. I then tried Walthamstow and got more value for money. There have been improvements and there is still room for more but it is ok and I can avoid leasehold in E17 which is a big advantage.