Buying a studio flat in London

cashbackproblems

ruelle wrote: »

My offer was £218k and it's a 10 min walk to the tube. Which areas in London are you looking at?

I'm from the suburbs so I'd rather not move back there.

I am looking around Bromley, Beckenham, Hither Green, Kidbrooke and other SE London areas.. so not sure if this counts as suburbs as its still zone 4-6 just on the overground. I have a budget of 360k max and looking for a 2 bed flat/house have offered on 5/6 but not been successful.

However the last few weeks since the BTL tax demand definitely seems to have cooled slightly (not to say it is going to still be easy).

Anyway having done a quick search I think you can get more for your money, unless you have a burning desire to be in Walthamstow..

Search in "London" in zoopla and put your budget and see what you get

ruelle

cashbackproblems, I know I could get more in London if I venture further out but I'd like to be close-ish to my friends.

If you're looking south have you thought about Catford, Woolwich or Abbey Wood? There seems to be lots of availability in those areas. The last 2 will be on the Crossrail and I've seen some v cheap 2 beds come up around there.

Prohorenkovs

So funny reading the OP, and then the posts after that. Resonates so much with the situation I'm in now.

Have been offered a shared ownership studio flat. Like the OP, thought it was great. In Bow, near the tube, great transport links etc. But now I'm having second thoughts, partly because of uncertainty over shared ownership, but also because it's a studio etc.

ruelle

Prohorenkovs wrote: »

So funny reading the OP, and then the posts after that. Resonates so much with the situation I'm in now.

Have been offered a shared ownership studio flat. Like the OP, thought it was great. In Bow, near the tube, great transport links etc. But now I'm having second thoughts, partly because of uncertainty over shared ownership, but also because it's a studio etc.

I think I checked those out online. I think a studio in zone 2 is more likely to keep its value than one in zone 3. Ha, maybe it's just a case of buyer's remorse. It's hard to 100% sure of something that you only see for 20 mins to so before you have to commit all of your life savings to.

economic

I wouldn't necessarily say zone 2 will hold its value more then 3. It's more general yes but specific locations even in zone 2 could be not as safe as certain areas in zone 3. For example my previous flat was in Kilburn. It took 7 months to get an offer and it wasn't even overly priced to begin with and was a nice flat. Even in zone 2 some areas are not in demand as people think. That's why I moved to Highgate. It's much nicer and I'm more confident I can sell it in future then if I kept my Kilburn flat.

Prohorenkovs

Why did it take 7 months? That seems an awfully long time for a London flat in a decent area like Kilburn. Was it too expensive?

economic

I did have a lot of viewings and the asking price wasn't too much compared to similar properties in the area. I'm not sure why it took so long but I suspect it's because of the area. It's got great transport links but it's not a particularly nice area and there doesn't seem to be any scope for regeneration that will make a big enough impact. In the recession the high road was pretty grim (not that it's much better now). So if we get a recession the area will be worse affected in my view.

westernpromise

AnnaDanishek wrote: »

I don't think it is a good time to buy any kind of a propety in London. In the UK home prices have gone through the roof, exceeding pre-crisis levels already long ago. A study by the OECD shows this location is overvalued and economists in Sweden have been raising the alarm since last year over the extreme risk of an imminent collapse. So you'd better to wait for several years till prices will go down

As wrong as it’s possible to be.

You are treating buying a house as a short-term speculative financial play, but it’s a long-term decision that should be determined by long-term considerations. This is especially so given that neither you, nor I, nor anyone else has any information or insight into what future property prices will be that would enable a superior decision.

There have been plenty of people who have imagined that they have, however.

https://forums.moneysavingexpert.com/discussion/5439303

There were people who were advising others not to buy because a crash was imminent 20 years ago. That has been appalling, appalling counsel. If you’d ignored it, you’d now be 80% of the way to paying off the mortgage on a house whose value has gone up by probably 300%. If you had taken it, you’d be watching in dismay as prices moved away from you so that the crash you need in order to gain by waiting goes inexorably up to and past 100%.

Someone on these fora did believe it, has rented for 20 years, and is on here regularly predicting a crash. He’s an unvested interest and needs this to be true - you don’t rent for 20 years then say there’ll be a 10% correction. Unfortunately he needs a crash of about 130% to be better off for having rented for 20 years.

The MSE way to look at this, I suggest, is to consider it in two ways. One is your negative equity risk. If you buy a £10k property today with a 90% mortgage, then at current typical rates, its value could fall to £76k but you’d still have no negative equity after 5 years, because £76k is what will be left on the mortgage by then. So you could sell it in 2021 for 24% less than you paid in 2016 and still clear your mortgage balance. Using your own actual costs, work out what price fall would take you into negative equity and ask yourself if it’s likely.

Next, look at it over 25 years. If you buy a £100k property today, then in 25 years’ time - after repaying £157k - it’s yours and you get to live in it more or less for free. If instead you rent it at 4% of its value for 25 years, and that value doesn’t change, then over the same term you’ll pay around £100k in rent. You say £57k but the trouble is you’re still £100k away from owning it, and you’re still paying rent indefinitely.

If its value were to go up by 3.5% a year over 25 years then of course it gets even worse. You’d pay as much in rent as the mortgage would have cost, but you’d be £200k away for owning it and you’re still paying rent of about £9k a year at this point.

Of course all this depends on assumptions but absent any better basis they are all there is. Some people are temperamentally averse to debt and hence fear a mortgage. But if you don’t buy, you rent. The sum of your indefinite future rents is a financial burden just like a mortgage is, but in some ways is worse, because mortgage is fixable to an extent that rent is not.

cashbackproblems

The rant above is a bit unnecessary lol. The OP is not questioning whether to buy or not, its more is a studio suitable for at the moment and in the longer term, which aged 38 and looking to start a family isn't.

economic

cashbackproblems wrote: »

The rant above is a bit unnecessary lol. The OP is not questioning whether to buy or not, its more is a studio suitable for at the moment and in the longer term, which aged 38 and looking to start a family isn't.

no he was replying to the comment by AnnaDanishek which needed to be put down.