Buying 2 bed flat with HTB scheme, should I pull out?

francesco_lbn

Me and my wife paid a fee of £500 to reserve a 2 bed flat in Walthamstow London which is gonna be completed in August 2021 and we reserved it at a price of £500,000. We are now worried and not sure if we should proceed anymore because of the havoc caused by Coronavirus and the most likely collapse of house prices in the next few months.
We don't know if the market collapse will affect also new houses which are yet to be completed and delivered, and we were wondering if we should standby and wait until next year and then maybe decide to pull out from the purchase or if it's a good idea leaving things at they are with the potential of a market recover.
What do you think?

jaybeetoo

When do you have to exchange contracts by?

francesco_lbn

They said the exchange of contracts is due next year around February 2021

jaybeetoo

You’ve got plenty of time before you have to make any decisions.  Just relax until normal times resume.

bucksbloke

I don't think the prices are going to drop as much as you think for new builds. If builders can't make a profit, they will simply stop building until the market picks up. 

numbercruncher8

Personally I would say if there are to be crashes, £500k for 2-beds in Walthamstow would be definitely seeing hits. You could buy a house with a garden for that in the surrouding areas.... if there are falls I would expect these to be more resilient in price. 
I look at the 2-bed flats (Warner style) which Walthamstow has.... these probably came to market at £450k at peak in 2018, gradually seen these asking prices drop to £425k, then £400k, £375k... seen some as low as £325k for ones that need work...
Depends how much you want a new build IMO or have to have a specific location, or need the HTB scheme to afford £500k. Should any of these not apply I think there are much better value options. 

[Deleted User]

Ouch !
half a mil for a flat in Walthamstow 
defo wait and see what happens in this disaster ! 

[Deleted User]

If you are paying £500k and are worried about a crash then you are out of your depth.  It's extremely risky in terms of cost, property type and location.

francesco_lbn

I am sorry but did you guys actually check the prices of the new developments in Walthamstow? I am not talking about existing flats, but flats to be built. I did not manage to find anything less than 495k. Check Properties of Feature 17 for example, or another development close to the station. I know it’s risky moving forward with the purchase and that’s why I asked everyone opinion but checking the prices of newly built flat I don’t think £500k is that much. And again I’m not talking about houses with a garden. What would you do essentially? Pull out from the purchase and check the prices again next year ?

hazyjo

From your last post, wouldn't you conclude the new builds are overpriced then? Or at least 'optimistic'? Why buy new? I sold a 3 bed house in North Chingford for not a lot more than that.

New builds become second hand the second you step through the door. I think that's what people are trying to tell you. Do  you want to buy something that you risk losing money on? I know it shouldn't be seen as an investment, but a flat probably won't be a long term option so you don't want to find yourself in neg equity or not affording to make the next move.

numbercruncher8

I know the area quite well. This isn't what I'd consider the nice end of Walthamstow. 
Put it this way, there are flats down the road at Hawker Place near the Homebase which I think you could get for around £150,000-£170,000 less for a 2-bed. 
Sure it'll be a bit further away from the station, won't be 'new' or as modern, probably less nice landscaped grounds, but that kind of price difference seems silly to me. Either the Hawker Place ones are vastly under-priced or the new builds are vastly over-priced. 
I don't know if you're simply looking for someone to tell you to go ahead, but it is fact that paying £500k for a 2-bed flat will be literally top dollars for this location. If you're there for the long-term then fine, but in the event the market does fall I think this will be one of the harder properties to sell, because they are priced unfavourably to a house with gardens and (most likely) they come with large service charges that houses do not.

Now I know what you're going to say... you're not interested in a house, but when it comes to thinking of reselling it is a bit of an error to think that everyone may think like you. There is a block of flats next to me that has had the same type of fate.... brand spanking new in 2016, flats were snapped up for anything between £450k-£480k for the 2 beds. There have been quite a few listed on Rightmove, but no sales in 2 years according to the Land Registry. Listing prices start at prices like £500k, get reduced and reduced and then taken off.... the only one I saw SSTC was one that went to £395k. A reason may be that there are lots of other new builds underway now and people may be attracted towards those.