Should I buy a flat in London right now?

Fraise

buglawton wrote: »

Just try getting a mortgage on a 'freehold' flat.

You can indeed. I did. So have about a dozen people I know.

Fraise

hpifever wrote: »

2 bed flat for around £450-500k! That's insane.

Location, location, location.

Not forgetting....lose flats are glorious. Some are modern, minimalist, but gorgeous in their own way and some are grand wings of period mansions. People pay a premium to live that lifestyle.

sebtomato

ViolaLass wrote: »

And thus reduce with inflation as time passes i.e. £500 a month in 5 years' time will be worth less than £500 a month now.

...assuming his income/salary increases at the same pace as inflation over the next 5 years (which has not be the case for many people over the last few years). Otherwise, £500 will still be worth £500 to him.

sebtomato

markyjames wrote: »

I've got 100k deposit and am thinking of investing in a 2 bed property for around £450-500k. I'm a first time buyer so I'm currently wasting lots of cash on rent (1200 per month.)

I'd probably buy in East London (Hackney/Finsbury Park etc).

Would this be financial suicide or is it a great time to buy right now?

Thoughts?

You are probably buying at the top of the market, so if it's for a place to live in the next few years, that's fine. I can't really see the prices dropping significantly in London over the next 5 years, given the demand for housing there, the people coming to London given the jobs and the constrained supply (slow planning permission, few sites available, few high rise buildings etc).

If it's for a financial investment over the short term, then probably not. Prices are not going to increase by 10% per year as they have done over the last few years, and could also drop in the short term, so you don't want to have to sell then.

You have to consider the full cost of buying a flat: mortgage interest, fees, solicitor, service charges, repairs, replacing appliances etc.

Once all added, you can compare with the rent you are paying and make an informed decision.

If you are very sensitive to interest rates (i.e. unable to pay mortgage at a base rate of 3-4%), then you need to fix for as long as possible. If you have some disposable income after paying rent, bills etc, then probably best to go for a lower, variable rate, particularly as base rates may not increase as fast and soon as originally thought by most people just a few months ago (given inflation and growth).