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Hello Everyone,

First allow me to say hi, this is my first post in the forum. Now please excuse me as I'd like to go straight to the point. I'm thinking of buying a 2 bed flat in Clapham (ideally I'd love to buy in Fulham / Putney but, sellers there seem to have been smoking crack when they set the asking price) . My budget (for obvious reasons) is 250k (I already have an agreement in principle for that amount) but, the prices I'm seeing at rightmove seem to indicate that anything nice in the 60 to 65 sqm range is being sold for about 350k My question is, what's exactly wrong here? my budget or their expectations?.

Thanks in advance.

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My question is, what's exactly wrong here? my budget or their expectations?.

What is wrong? I'd say your research.

1) A very quick Rightmove search for Clapham show 2 bed flats within your budget.

2) The name of this website might give you a clue as to how most people here feel about sellers' expectations and what's going to happen to the housing market. There's a lot of good information here - you can choose to read it or not.

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pyracantha, you've made a lot of assumptions about what I have and haven't done and what I may or may not choose to do. I know there are 2 bed flats within my budget in Clapham (I've been looking at rightmove for 2 months already, also checked property snake and property bee) and I've probably not been detailed enough as to what I'm looking for, please accept my apologies. Property wise I don't want anything on top of a business or in a noisy road, I wont' buy anything in a building more than 4 or 5 storey high and it has to have at least 60 sqm, also I don't like building where I have to walk past everyone's door to get to mine (ie: shared balcony) and finally, I want a share of freehold. That's the kind of property I'm having a hard time to find below 350K.

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your 250k budget is way too low for Clapham. As you say, the type of places that are OK to live in will go for 350k plus. Don't ask me where the money keeps coming from but it keeps coming. You have got a lot of competition in the 2 bed market - it's the size most FTBuyers (often couples with a larger budget than you) and BTletters want.

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your 250k budget is way too low for Clapham. As you say, the type of places that are OK to live in will go for 350k plus. Don't ask me where the money keeps coming from but it keeps coming. You have got a lot of competition in the 2 bed market - it's the size most FTBuyers (often couples with a larger budget than you) and BTletters want.

I agree. You could buy a 2 bed flat in Clapham for £250k, but it won't be the type of place you actually want to live. I live out in zone 6, and even here the type of 2 bed flat that you can buy for that amount is compromised with the good stuff all £300k+.

I think most on this site would agree that £250k is the most that should be paid for an average 2 bed flat in what is quite an average part of south London, but this does not mean that the market is listening.

There is still a lot of money about and combined with the low interest rates, this is what is keeping the market going.

It can only last so long, though. This type of flat is typically bought by people in their 20's who sell on and move out in their 30's. This is unlikely to change (much), so I'd have thought that these £350k flats will start piling up and that must have an effect on price eventually.

I'd not expect the prices to come down too quickly, though.

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Hello Everyone,

First allow me to say hi, this is my first post in the forum. Now please excuse me as I'd like to go straight to the point. I'm thinking of buying a 2 bed flat in Clapham (ideally I'd love to buy in Fulham / Putney but, sellers there seem to have been smoking crack when they set the asking price) . My budget (for obvious reasons) is 250k (I already have an agreement in principle for that amount) but, the prices I'm seeing at rightmove seem to indicate that anything nice in the 60 to 65 sqm range is being sold for about 350k My question is, what's exactly wrong here? my budget or their expectations?.

Thanks in advance.

Regardless of prices, your choice is going to be very limited if you want share of freehold. Most flats are l/h - you are somewhat more likely to find share of f/h with purpose built Victorian or Edwardian maisonettes, though they're still mostly l/h.

It is possible to find a nice 2 bed flat or period m/ette for £250K, but you'd have to shift your expectations to other areas, at least for the foreseeable future. Clapham is still very expensive. My daughter was living there but has bought elsewhere because there was simply nothing halfway nice she could afford in Clapham.

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Regardless of prices, your choice is going to be very limited if you want share of freehold. Most flats are l/h - you are somewhat more likely to find share of f/h with purpose built Victorian or Edwardian maisonettes, though they're still mostly l/h.

Good point. It is also worth noting that share of freehold is sometimes not even an advantage over leasehold. Having a flat held on a long lease with a reasonable freeholder charging sensible service charges is far preferable to being involved in a fractious group of residents who can't agree on anything when it comes to repairs and improvements.

I am not saying it is always like that, but it certainly can be, especially in larger blocks.

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£250k will not buy much in Clapham. Very established south London area with nice bars, restaurants, open space, good supply of quality houses and flats, easy access to the City. Would of thought £400k is more like it for an okay 2-bed there. A friend recently spent Almost £700k on a 2-bed there (a very, very nice one). Would look elsewhere - maybe somewhere like Tooting?

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£250k will not buy much in Clapham. Very established south London area with nice bars, restaurants, open space, good supply of quality houses and flats, easy access to the City. Would of thought £400k is more like it for an okay 2-bed there. A friend recently spent Almost £700k on a 2-bed there (a very, very nice one). Would look elsewhere - maybe somewhere like Tooting?

That's where my daughter bought - having rented in Clapham. Light, spacious Edwardian m/ette, 2 proper dbl beds, nice quiet road, parking, own little garden, just over 70 sq. m, for under £250k.

Edited by Mrs Bear

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Regardless of prices, your choice is going to be very limited if you want share of freehold. Most flats are l/h - you are somewhat more likely to find share of f/h with purpose built Victorian or Edwardian maisonettes, though they're still mostly l/h.

It is possible to find a nice 2 bed flat or period m/ette for £250K, but you'd have to shift your expectations to other areas, at least for the foreseeable future. Clapham is still very expensive. My daughter was living there but has bought elsewhere because there was simply nothing halfway nice she could afford in Clapham.

First of all, thanks everyone for your replies.

Any ideas as to why most flats are l/h ?. What's wrong with actually selling the stuff?. I mean, I don't know the intention of the average buyer in London but, like with most things, when I buy something It means I want to own it, not rent it for a long time.

Are there any indicators I could look at ,(apart from the obvious ones) that might indicate a shift in price tendency (downwards) in the next 8-12 months?

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First of all, thanks everyone for your replies.

Any ideas as to why most flats are l/h ?. What's wrong with actually selling the stuff?. I mean, I don't know the intention of the average buyer in London but, like with most things, when I buy something It means I want to own it, not rent it for a long time.

Are there any indicators I could look at ,(apart from the obvious ones) that might indicate a shift in price tendency (downwards) in the next 8-12 months?

I'm not an expert by any means, but freehold is connected to the land a property sits on, so it stands to reason that a flat in a block can only share it with other residents, which can be very complicated if there are several and there are repairs and maintenance to pay for. Having said that, some companies that manage repairs etc. in a block are blatant ripoff merchants, charging way over the odds for what needs doing, though leaseholders do have a right to challenge and find another company.

In the case of maisonettes (the purpose built period type) there is just one freeholder for (usually) just two properties, so it becomes simpler and often the owner of one m/ette will be the freeholder of both, though you do see quite a few with share of f/h. Another advantage of this type of property is that you don't usually have service/maintenance charges to contend with.

They differ from houses that have been converted into flats in that you have your own front door from the street - there will be two adjacent front doors.

AFAIK anyone has the right to buy a f/h or extend a lease, though in the case of buying f/h all leasholders have to agree. And extending a lease of less than 80 years costs a lot more.

What you must do when considering a l/h flat (which is the vast majority) is to find out how much the service/maintenance charges are. EAs often don't give this information as standard, for the simple reason that it can be a lot (particularly in fancier modern blocks) and will put buyers off. You also need to find out whether there are costly repairs coming up, which can whack them right up. There is a large l930s block near me where lots of flats were up for sale a few yrs ago because the (huge) roof needed replacing, and it was going to cost about £2000 per flat, on top of the usual charges.

I would certainly look at other areas than Clapham. Best thing (apart from doing lots of internet research) is to pick an area and walk around it at different times, getting a feel for it, which are the nicer roads, etc. There is no substitute for research on your own two feet.

I haven't been watching Clapham lately, but there's no doubt that in e.g. Tooting prices are mostly a mite less delusional than they were a couple of years ago. E.g. a flat that would have been priced at maybe £285K is now more like £269K, evidently hoping for £250K.

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First of all, thanks everyone for your replies.

Any ideas as to why most flats are l/h ?. What's wrong with actually selling the stuff?. I mean, I don't know the intention of the average buyer in London but, like with most things, when I buy something It means I want to own it, not rent it for a long time.

Are there any indicators I could look at ,(apart from the obvious ones) that might indicate a shift in price tendency (downwards) in the next 8-12 months?

Most are probably leasehold because it alows the developer to make more money. There are some advantages to it as the responsibility and effort involved in maintaining the outside of the building, structure and common areas sits with the freeholder. In a large block it would probably be almost impossible for all the leaseholders to agree on how much gets spent on what and when but even in a smaller block or a house conversion it only takes one **** to make everyone's life a nightmare. Often the leaseholders do actually own the building, usually through an allocation of shares in a holding company. A managing agent is then appointed by the owners (or the owners having some say in who the developer appoints) which does help keep costs in check. Many different scenarios so it is worth looking into what you are getting into.

Some advice here:

http://www.lease-advice.org/publications/documents/document.asp?item=7

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...and as for prices heading down over the next year there is every possible factor discussed on this site. You will have to make your own mind up as know one knows until it happens. There has already been falls in prices since the market last peaked in 2007, recent falls around the UK are widely reported but you are looking to buy in London which has some differences. Some will tell you prices will continue to rise strongly (although I think that is just the Daily Express and their property empire building owners and reporters), others that they will stay supported by a lack of availabilty, not enough new building and investors looking to find a way to make returns (savings and stocks not being attractive).

As for it going the other way the most common theory is that prices will fall back gradually over the coming years or at best stay pretty much flat with values eroded by other economic factors (inflation, interest rates...), or there will be an almighty crash which if it does happen will most likely be driven by the collapse of the Western economies, our banking system and currencies as we all struggle to pay our debts. If the latter happens I doubt there will be many people in a position to buy (hence why the prices will have crashed).

Anyone's guess!

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your budget & criteria are incompatible, sadly.

much as it pains me to mention the show but did you see the 'location, location' from a couple of months ago where they looked at Balham [v similar to Clapham price wise]?

IIRC they had exactly the same budget as you. i think they concluded that for £250k they'd have to go for either: (1) a one-bed place; or (2) something in a cheaper area.

summary, not sure if the actual episode can be viewed online?

Edited by the flying pig

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your budget & criteria are incompatible, sadly.

much as it pains me to mention the show but did you see the 'location, location' from a couple of months ago where they looked at Balham [v similar to Clapham price wise]?

IIRC they had exactly the same budget as you. i think they concluded that for £250k they'd have to go for either: (1) a one-bed place; or (2) something in a cheaper area.

summary, not sure if the actual episode can be viewed online?

I was thinking just that, although hopefully he isn't too worried about the 'jealousy factor' of friends in making a home decision.

Clapham, Battersea, Balham, and bits of Streatham Hill (below Thornton Ave) 250k doesn't buy you much.

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I'd really hold your nerve on buying property in London and don't do it yet. There's the look (to me at least) of a pattern emerging where there are various different property markets going on alongside one another. At the top end, things may not be much changed - the rich selling to the rich, or wealthy foreigners cashing in on sterling's low value etc. But the further you get from proper wealthy areas, the more there are signs of property falling in price. Until now London has appeared immune - that changed a little with the recent Land Reg figures - but anyway I have already seen in the last 4-5 months price falls in cheaper flats in less desirable streets in London- and I mean absolute real terms falls (i.e being offered at less than they were bought for). Not many, but straws in the wind. Also none that I would want to live in!

I'm talking about places like Streatham. I'm also talking ex-council, 30's mansion block, 80s newbuild rubbish, that sort of thing (I know some of the 30's blocks are nice btw, but some really need a lot of work doing these days). Anyway, the bottom end, geographically speaking and quality speaking is wobbly, even in impregnable London.

Clapham's a good bit higher up the pecking order than Streaham of course (these days anyway, I'm such an old timer that I remember when it was rather the other way round). But I'd give it a few months at least and see what's up, you might see places like Brixton and Clapham start to fall in real terms I think. They are both basically very overvalued and I lived in both during the last proper recession (mid eighties through to mid 90s for both those areas) and they got pretty bloody rough, lots of crime, lots of general badness going on. I think some of the new middle-class inhabitants may want to cut and run. You may decide you don't want to move in....

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Nice post Stret.

I had this from an top end EA the other day:

As for property in London, it is frustrating. London is effectively being subsidised by the rest of the country thanks to QE and low interest rates’ effect on sterling. QE also puts money in the hands of bankers helping bonuses, etc. However, all my sources in the city tell me that bonuses this year will be poor and that there will be a huge number of layoffs: banks increased basic salaries as a way of getting round the government’s bonus rules. However, this obviously increased their fixed costs and they are now realising that they cannot operate like this.

This will affect the areas outside prime central London. However, how long it will take is another question. The market will receive another boost of morphine (aka the Olympics), but then I expect the patient to fully appreciate the pain as I don’t think there are any more drugs left in the locker. Of course I may be wrong on this last point and the politicians may find another way to delay the pain/destroy the currency (or the economy starts to grow and higher unemployment doesn’t transpire, but I know we have the same view on the likelihood of this). In which case, property will be better than cash, but gold, I suspect, will be the better bet.

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Yes, you're mental. Don't even think of buying a flat in the present climate. What are you, an imbecile?

There, that's nice and plain. You're on HPC, you're entitled to the full power response, with no ifs and buts. DO NOT BUY A FLAT, unless you want to go bankrupt. That plain enough for you? House prices fell 90% in the last great depression, and we're in another one now.

Buy gold and silver, save money. Come back when the Euro's crashed, the dollar has hyperinflated etc.

I lived in Clapham South in 1997. The house I lived in sold for £350,000. The average wage then was £16,000. Same house now asking price about 1.4 million. Average wage now £25,000. 1997 was the beginning of a boom, now is a great depression. The numbers don't add up.

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I'd really hold your nerve on buying property in London and don't do it yet. There's the look (to me at least) of a pattern emerging where there are various different property markets going on alongside one another. At the top end, things may not be much changed - the rich selling to the rich, or wealthy foreigners cashing in on sterling's low value etc. But the further you get from proper wealthy areas, the more there are signs of property falling in price. Until now London has appeared immune - that changed a little with the recent Land Reg figures - but anyway I have already seen in the last 4-5 months price falls in cheaper flats in less desirable streets in London- and I mean absolute real terms falls (i.e being offered at less than they were bought for). Not many, but straws in the wind. Also none that I would want to live in!

I'm talking about places like Streatham. I'm also talking ex-council, 30's mansion block, 80s newbuild rubbish, that sort of thing (I know some of the 30's blocks are nice btw, but some really need a lot of work doing these days). Anyway, the bottom end, geographically speaking and quality speaking is wobbly, even in impregnable London.

Clapham's a good bit higher up the pecking order than Streaham of course (these days anyway, I'm such an old timer that I remember when it was rather the other way round). But I'd give it a few months at least and see what's up, you might see places like Brixton and Clapham start to fall in real terms I think. They are both basically very overvalued and I lived in both during the last proper recession (mid eighties through to mid 90s for both those areas) and they got pretty bloody rough, lots of crime, lots of general badness going on. I think some of the new middle-class inhabitants may want to cut and run. You may decide you don't want to move in....

Thanks a lot for your answer, I'm starting to think that waiting until the 2nd half of 2012 might be a good idea, at least in terms of seeing where the prices are heading. I'm not in a massive hurry to buy but due to personal circumstances, neither can wait indefinitely. Thanks a lot for your advice.

As someone said in a previous post, I can find the type of property I want at the price I can afford in Tooting but, I still like Clapham quite a bit so I'd rather wait for some time and hope for a shift in prices over there.

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I'm in pretty much the same situation as you - looking to buy a reasonable 2-bed flat in Balham next year. The flat i'm renting at the moment which is pretty much what i'd be looking for, would sell for about £350k.

I've been sitting on cash, waiting for 3 years so far and don't really want to wait much longer.

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I haven't been watching Clapham lately, but there's no doubt that in e.g. Tooting prices are mostly a mite less delusional than they were a couple of years ago. E.g. a flat that would have been priced at maybe £285K is now more like £269K, evidently hoping for £250K.

Actually, Tooting seems to have gone delusional recently to me - with very little on the market and a few crazies paying over 2007 prices. I saw 2 maisonettes like the one described with loft conversion sell for 330k and 335k.

I have seen flats like this that were selling for 250k - 280k last year go under offer around 300k.

http://www.rightmove.co.uk/property-for-sale/property-20413836.html

http://www.rightmove.co.uk/property-for-sale/property-31598473.html

http://www.rightmove.co.uk/property-for-sale/property-35736704.html

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Actually, Tooting seems to have gone delusional recently to me - with very little on the market and a few crazies paying over 2007 prices. I saw 2 maisonettes like the one described with loft conversion sell for 330k and 335k.

I have seen flats like this that were selling for 250k - 280k last year go under offer around 300k.

http://www.rightmove.co.uk/property-for-sale/property-20413836.html

http://www.rightmove.co.uk/property-for-sale/property-31598473.html

http://www.rightmove.co.uk/property-for-sale/property-35736704.html

I was referring to 2 bed maisonettes - those are all 3 bed, though would agree that most of these 3 beds are still very overpriced, particularly given that bed 2 is not usually a proper double and the 3rd is usually very small.

Layouts of these m/ettes does vary a lot, some are much better than others though the better (more spacious, 2 proper dbl beds) layouts are harder to find.

RM emailed me details of one the other day - 2 bed with most peculiar layout - access to garden via the bathroom!

Would need quite a bit spent on it to sort it out, still asking £275K I think, evidently hoping for £250K.

A few I was following (APs v. sold prices) - 280/250, 299/269, 330/290, 270/247.

The more expensive ones were v nicely done up, one with extension and large garden. All also the more spacious, 2 proper dbl bed type. all with private gardens.

+all in one of the nicer roads. Still daft prices, though.

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Yes, you're mental. Don't even think of buying a flat in the present climate. What are you, an imbecile?

There, that's nice and plain. You're on HPC, you're entitled to the full power response, with no ifs and buts. DO NOT BUY A FLAT, unless you want to go bankrupt. That plain enough for you? House prices fell 90% in the last great depression, and we're in another one now.

Buy gold and silver, save money. Come back when the Euro's crashed, the dollar has hyperinflated etc.

I lived in Clapham South in 1997. The house I lived in sold for £350,000. The average wage then was £16,000. Same house now asking price about 1.4 million. Average wage now £25,000. 1997 was the beginning of a boom, now is a great depression. The numbers don't add up.

The average wage of someone buying in Clapham isn't the quoted £25k, though. London buyers tend to earn far more than the average, hence the silly prices.

OP, you're looking at St Reatham on that budget. There are some nice streets off the High Rd, but it's still a regarded as a shit hole.

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The average wage of someone buying in Clapham isn't the quoted £25k, though...

yeah but his pt is that it's gone from a mere 22 times the average wage to [if 100% of asking price were to be achieved] 56 times.

this is due to a combination of three factors, I suppose: (1) an increase in the number of jobs in the city [which went into reversed post bubble slightly], city workers hired as graduates around dotcom & credit bubbles now aged late 20s to mid 30s, looking for 'family' homes which don't get built any more in London; (2) increased divergence betweem city & non-city wages [which hasn't really reversed at all]; (3) gentrification of Clapham; (4) rise of high joint income multiple mortgages [which hasn't really gone into reverse at all for those with big deposits].

...OP, you're looking at St Reatham on that budget. There are some nice streets off the High Rd, but it's still a regarded as a shit hole.

agree with your first and second points here.

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Nice post Stret.

I had this from an top end EA the other day:

As for property in London, it is frustrating. London is effectively being subsidised by the rest of the country thanks to QE and low interest rates’ effect on sterling. QE also puts money in the hands of bankers helping bonuses, etc. However, all my sources in the city tell me that bonuses this year will be poor and that there will be a huge number of layoffs: banks increased basic salaries as a way of getting round the government’s bonus rules. However, this obviously increased their fixed costs and they are now realising that they cannot operate like this.

This will affect the areas outside prime central London. However, how long it will take is another question. The market will receive another boost of morphine (aka the Olympics), but then I expect the patient to fully appreciate the pain as I don’t think there are any more drugs left in the locker. Of course I may be wrong on this last point and the politicians may find another way to delay the pain/destroy the currency (or the economy starts to grow and higher unemployment doesn’t transpire, but I know we have the same view on the likelihood of this). In which case, property will be better than cash, but gold, I suspect, will be the better bet.

Pretty vacuous and factually incorrect assessment of the economy.

For one thing, banks do not need to lay people off due to high base salaries. They simply need to lay people off because the markets have dried up. If there is not enough business to go around then you simply can't be employing the same number of people as you would if there was more activity.

In the long run, London's place as the European centre of finance is clearly under threat. People's memories often don't go very far back (which is to be expected for many Estate Agents or even Financial Analysts who have known nothing other than the London of the 90s and the 00s) but London imposing itself as a major financial centre after the Big Bang is all very recent. Before that, everything was pointing towards Frankfurt becoming the major financial centre in Europe but the government at the time seized an opportunity to take advantage of London's cultural place in the world and liberalised the markets completely. Any politician using those kinds of terms these days and bandying about those ideas would not last a week in office. Just as London became a significant financial centre (again) over the past couple of decades, it is not inconceivable that that position will be lost within a decade too.

With a government that has nothing really to offer to the economy as an alternative (can London become a major centre for Information Technology? probably not due to lack of talent, quality graduates and simply funding incentives), the future looks bleak even past the debt crisis.

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