Crashman Begins

Whats Your Opinion. 1St Time Buyer, Buying At Low End Of Wealthy / Saught After Area Near London?

55 posts in this topic

Hello HPC'ers,

I would be a 1ST TIME BUYER, buying at low end of a wealthy / saught after area near London.

My main thought is that I would be shielding myself from NEG Equity by buying such an area, instead of buying

in areas that are dropping & dont tick all our boxes.

Also we want to move there because of the good schools, cheap childcare & the facilities i.e parks, classes, scenery & transport. It ticks all the boxes for us

Whats your thoughts

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Ask yourself this: how much was it in 1993 before the easy money? Now that there is no more easy money, how much will it be?

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Go for it. Live your life.

You'll now get a few dozen posts telling you not to and to live a in a shed in the woods until the world ends.

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Go for it, as long as your buying to live not for profit and it's near London. I'm watching similar places near London near a tube and the way properties are going here, as each day passes and I'm slowly losing faith in a HPC for where I want to buy.

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Hello HPC'ers,

I would be a 1ST TIME BUYER, buying at low end of a wealthy / saught after area near London.

My main thought is that I would be shielding myself from NEG Equity by buying such an area, instead of buying

in areas that are dropping & dont tick all our boxes.

Also we want to move there because of the good schools, cheap childcare & the facilities i.e parks, classes, scenery & transport. It ticks all the boxes for us

Whats your thoughts

That was my thinking when I bought in Putney in 2003, I was expecting house prices to crash back then as they were ridiculously high. Still the mortgage payments were less than the rent so it made sense to buy.

So I chose a desirable 1 bed flat in a good street in Putney rather than a 2 or 3 bed in a not so nice place in London. My thinking was that property in nice areas hold their prices better because wealthy people arent so reliant on credit.

I looked at past prices too. We bought for £235k in 2003. The flat sold for £191k in 1999 and £140k in 1993, so I though that was a steady progression and not entirely unreasonable.

I would say you should be looking to buy something in a good part of London at 2005 prices now.

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No where is immune. The price of properties in your desired area are at a premium to other areas. That premium will always be there but prices will still fall. The only way to protect from NE is have a massive deposit.

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No where is immune. The price of properties in your desired area are at a premium to other areas. That premium will always be there but prices will still fall. The only way to protect from NE is have a massive deposit.

I agree...also a small one bed place maybe fine for one person who is out working all hours to pay for it, but the chances are it may not be fit for purpose for as long as a larger two bed place...the cost of moving can easily be £20k in itself so you don't want to be doing that too often if you can help it. ;)

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Hello HPC'ers,

What's the LTV? What will the monthly mortgage payments be? Fixed or variable? How long is the term of the initial mortgage deal?

I don't think anything can be assumed.

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I presume your choices are: (1) buying in what you see as an upmarket area; (2) buying in what you see as a less upmarket area; or (3) renting.

Basically if your main choice is (1) vs. (2) you should make your decision based on which bests suits you and your pocket as a place to live long-term there rather than on HPI predictions... it’d be incredibly silly, a complete nonsense, for anyone to think that they can do area-specific HPI predictions.

If you main choice is buying vs. renting in a general sense then all the usual financial and non-financial arguments apply [see the other squillion threads about it].

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What are you going to exchange for food during the depression starting next year?

Ok, that was a bit hard. :)

Bottom line is if you need to move do it, if you can wait do it. No harm in waiting a few months right now.

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If you're planning on living there ten years and you'll be happy living in a place that's in NE then go for it. NE isn't a problem unless you have to sell.

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Ask yourself this: how much was it in 1993 before the easy money? Now that there is no more easy money, how much will it be?

Around 60 - 70K

Surely if it gets that cheap, the millionaires / everyone else who likes that area will just buy them up.

Sought not Saught! :blink:

OOps was in a rush this morning ; )

That was my thinking when I bought in Putney in 2003, I was expecting house prices to crash back then as they were ridiculously high. Still the mortgage payments were less than the rent so it made sense to buy.

So I chose a desirable 1 bed flat in a good street in Putney rather than a 2 or 3 bed in a not so nice place in London. My thinking was that property in nice areas hold their prices better because wealthy people arent so reliant on credit.

I looked at past prices too. We bought for £235k in 2003. The flat sold for £191k in 1999 and £140k in 1993, so I though that was a steady progression and not entirely unreasonable.

I would say you should be looking to buy something in a good part of London at 2005 prices now.

Getting it at close to 2005.

It sold for roughly £195,000 in 2004 & a similar one sold in 2007 for roughly 285k

I agree...also a small one bed place maybe fine for one person who is out working all hours to pay for it, but the chances are it may not be fit for purpose for as long as a larger two bed place...the cost of moving can easily be £20k in itself so you don't want to be doing that too often if you can help it. ;)

It will be a 2 bed with my Mrs & 2 kids

What's the LTV? What will the monthly mortgage payments be? Fixed or variable? How long is the term of the initial mortgage deal?

I don't think anything can be assumed.

10% deposit / 1200 PM repayment / fixed for two years. Cant see rates going up for a long time.

"near london"

Are we talking some riot ridden suburb or some tranquil middle class exurb?

In a tranquil middle class suburb

What are you going to exchange for food during the depression starting next year?

Ok, that was a bit hard. :)

Bottom line is if you need to move do it, if you can wait do it. No harm in waiting a few months right now.

Been waiting a long time & if shit hits the fan again banks might reduce lending to 15/20 % deposit which will leave me saving up for another 5-6 years ?

If shit hits the fan like you say, then my PM's will skyrocket & I'll use some / all to pay off the flat in full

& the rest will go on a house with a garden (for food) further out, whilst I put the flat on rent ; )

& if it dosent skyrocket supply will continue to dwindle allowing me to swap it eventually for our deposit on a second home

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Still the mortgage payments were less than the rent so it made sense to buy.

what were the maintenance and ground rent costs?

opportunity cost on your deposit?

I *loathe* flippant comments from people who claim to do the maths but clearly haven't

Edited by Si1

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NE isn't a problem unless you have to sell.

or if you consider your net worth as an issue in the long run

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The 50,000 question is what value you think the house will be in 5 years time. No one can help you with that, it's your judgement call.

second question is what will you income be in 5 years. If you lose your job in ne, it's bankruptcy.

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The 50,000 question is what value you think the house will be in 5 years time. No one can help you with that, it's your judgement call.

second question is what will you income be in 5 years. If you lose your job in ne, it's bankruptcy.

sorry,forgot to add my worthless view: 50 percent drop (it was 70-90% in 1929) and a good chance one of you (if both need work to pay mortgage) will lose your job.

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sorry,forgot to add my worthless view: 50 percent drop (it was 70-90% in 1929) and a good chance one of you (if both need work to pay mortgage) will lose your job.

And the prize for optimist of the day goes to.....

Scary thing is, it's hard to fault your logic. :blink:

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don't be a tw@t.get yourself a shed and live in the woodz until the world ends.

:D

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sorry,forgot to add my worthless view: 50 percent drop (it was 70-90% in 1929) and a good chance one of you (if both need work to pay mortgage) will lose your job.

Im also Hedged in case of a SHTF scenario

Differences between great depression & what were are expecting :

There is a lack of a gold standard, which serves as a restriction to how much the money supply can be expanded. The dollar was devalued relative to gold during the Great Depression, so there were attempts to circumvent restrictions on the money supply, but ultimately the gold standard was not fully abolished until 1971, and so the Federal Reserve was a bit more restricted in how much money it could create. This restriction does not exist today.

http://www.dailymarkets.com/economy/2009/01/02/now-and-the-great-depression-similarities-and-differences/

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Im also Hedged in case of a SHTF scenario

Differences between great depression & what were are expecting :

There is a lack of a gold standard, which serves as a restriction to how much the money supply can be expanded. The dollar was devalued relative to gold during the Great Depression, so there were attempts to circumvent restrictions on the money supply, but ultimately the gold standard was not fully abolished until 1971, and so the Federal Reserve was a bit more restricted in how much money it could create. This restriction does not exist today.

http://www.dailymarkets.com/economy/2009/01/02/now-and-the-great-depression-similarities-and-differences/

Agreed, the 1929 figure shows a pure deflation of assets. The alternative is inflAtion, such as doubling wages, or devaluing the currency, Zim or Weimar.

I can't see wages rising, because it's so easy to sack people and replace with cheaper. And currencies can't all devalue at the same time.

So my view is most of the fall will come in house prices.

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Agreed, the 1929 figure shows a pure deflation of assets. The alternative is inflAtion, such as doubling wages, or devaluing the currency, Zim or Weimar.

I can't see wages rising, because it's so easy to sack people and replace with cheaper. And currencies can't all devalue at the same time.

So my view is most of the fall will come in house prices.

Agree with you exept the last bit, currencies are all devalueing togther.. against you know what.

And house prices havent crashed as predicted. They kind of just paused after QE & market manipulation.

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24gray24

Im glad you brought up those points, I hadnt compared this situation to the great depression before & learned something new that I'd heard over & over again but didnt fully understand why..."there will be Inflation"

Why ? Because theres no limit to the money supply today like there was in the great depression .. GULP :ph34r:

Edited by Crashman Begins

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