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http://www.thisislondon.co.uk/lifestyle/article-23889164-prices-are-supposedly-falling-so-why-does-it-cost-pound-200000-to-get-on-the-property-ladder-where-i-grew-up.do

Prices are supposedly falling – so why does it cost £200,000 to get on the property ladder where I grew up?

Connie Allfrey

19.10.10 I'm back on the property prowl for the third time in as many years, filled with both hope and foreboding. The good news seems to be that house prices are falling — though sellers are artificially hiking up asking prices in anticipation of lower offers. The bad news is that the banks are making a mortgage more unobtainable than ever. Add to that a surge in London rents and my hunt for a flat takes on a new urgency.

My previous search saw me make an offer on a two-bed back in the dizzy heights of 2007, when securing a mortgage for 10 times my salary was not impossible but my offer was snubbed at the last minute.

I'm 29 now though, tired of throwing confetti money at rent and of feeling fearful when friends say their lives have got meaning since they found a flat with room for a loft extension with bath.

So I'm looking again, slightly jaded, but more finely tuned. I am keen to stay in the west, as although I'll get less space here than in Stoke Newington, where one artist friend has just bought a fantastic flat, keeping close to my family and most of my friends is a bigger draw. My search started two months ago when I read with glee how buyers are holding all the cards, prices are going to slump more, now is the time. Hurrah, I thought, bracing myself for a day of viewings. But the reality is slightly more Farrow & Ball beige.

House prices may be dropping but “London is exceptional”, as Peter Rollings, managing director of Marsh and Parsons, hammers home on his video blog. There are the overseas buyers — Greek and Spanish money coming in — who confuse things, plus there are simply more people than properties.

Demand is high and the pickings are certainly slim; property owners are clinging onto their bricks, partly because, if they did sell, they'd have trouble putting their feet on the next step of the ladder, forcing them to rent. Lack of stock is a big concern and although the market keeps shuffling along with births, deaths and marriages, it's not the array I was expecting.

In fact, I am wholly disheartened by how little £200,000 can buy, which is the amount my mortgage can stretch to on £28,000 a year, even with a dizzy deposit of £60,000. A soulless 300sq ft basement studio in W10 is the depressing truth for such an amount. As I am intending to be holed up in my new home for a while and am reluctant to cull all loud, smoking friends who would dwarf it further, I extend my search above £250,000, feeling vertiginous and fearful as I do so.

In order to secure this larger mortgage, I need my parents as guarantors that I won't default on payments. I'm incredibly fortunate that they are able and willing to do this, but bringing them in does muffle the exciting jingle of my prospective keys somewhat. For anyone on £28,000 with no support at all it's a battle to find a first property with these stricter mortgage rules and so little choice.

Even with my leg-up, I'm struggling to find one of those “drastic reductions” I keep reading about. Westward, vendors seem to be sticking like lichen to their asking prices. A covetable garden flat on Bracewell Road was over my budget but I was told the vendor had already refused an offer of only £3,000 less, despite her new baby and need to upsize.

Thank God for Chris from Foxtons, flame-haired with bright blue suit and shoe-boots, who is recently engaged and hoping to pay for the wedding through a shrewd property move — he intends to buy something for £175,000 now, make some tweaks, and sell it on next year, April he says, for £250,000. His confident plan sounds assuring.

When something new drips on, Chris texts and we whizz to see it while he regales me with property stories, which panic or elate. One lady recently had her Holland Park property on for £675,000 furnished but received so much attention she upped the price to £695,000. Despite an immediate offer, she's now thinking she could get that without the furniture. Maybe she can as she clearly has a thoroughbred on her hands, but it's bad news for me that vendors can still be so greedy.

Some prices are realistic — the North Kensington two-bed I had an offer on in 2007 is back on again at £30,000 less. While making me feel better about the rent I've technically squandered, this also makes me realise how mad I and the property market were back then; biting at anything with room to spin a minnow in.

Now I'm more cautious, even though my budget is a handsome £250,000. I was tempted to make an offer on the Bassett Road flat (above) but it felt too much like a roulette move than a definite winner, and I feel extra pressure now to ensure I make the right investment choice. Plus I want to be able to fit my family in for dinner, as my parents will have a stake in the oven.

I'm desperate not to slip down the seductive snake of renting again but to get my toe on a property rung by Christmas. If only I manage to tether this elusive mortgage first...

Getting A Mortgage

The environment has changed completely in the past few years, says Tony from Alexander Hall when I phone him. The Bank of England's Credit Conditions Survey warns of “tightened credit-scoring criteria” and a “more cautious approach”; notably this means preparation must be thorough, with my documents, proof of income, credit etc, all in order to give me the best shot.

It's a panic for me, because while I have a 25 per cent deposit of £60,000, which is fairly high for a first-time buyer, my salary is low at £28,000. Tony says the maximum I could hope for is £125,000, about five times my salary, so I'd be looking for a £195,000 property. I could then get a blood relative to be a guarantor, but even that is harder now with lenders really prying into my parents' financial situation, then mine, to see if I could, in a few years, substantiate the mortgage by myself.

If I did secure a £125,000 mortgage, using my parents as guarantors, I could happily exist with secure monthly payments of about £622 a month, but with the main interest rate set to steadily rise, this will only increase. Securing a mortgage is possible but I hang up the call feeling despondent and anxious, surrounded by shreds of Opi nail varnish.

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Interesting article...

I like her trust in 'Chris from Foxtons', the property flipper, who hopes to pay for his wedding with a smart deal. He sounds ideal as an adviser........

I'm surprised he's not on The Apprentice....

Edited by juvenal

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and I feel extra pressure now to ensure I make the right investment choice

Sorry, is this a home or an investment you're looking at. If it's the latter, why are you getting so emotionally involved with it all?

In fact, I am wholly disheartened by how little £200,000 can buy, which is the amount my mortgage can stretch to on £28,000 a year, even with a dizzy deposit of £60,000. A soulless 300sq ft basement studio in W10 is the depressing truth for such an amount. As I am intending to be holed up in my new home for a while and am reluctant to cull all loud, smoking friends who would dwarf it further, I extend my search above £250,000, feeling vertiginous and fearful as I do so.

So she's on £28,000 and she's looking at FTB properties in the range of a quarter of a million pounds? I'm presuming the £60,000 is the BOMAD leg up she also mentions in the article.

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Interesting article...

I like her trust in 'Chris from Foxtons', the property flipper, who hopes to pay for his wedding with a smart deal. He sounds ideal as an adviser........

I'm surprised he's not on The Apprentice....

I'm reluctant to take on a £200k mortgage and I earn quite a bit more than she does. I don't know how she thinks she can pay for that. It's not about multiples, it's just comon sense. Years ago, I'd say there was no harm in stretching yourself initially as inflation (particularly wage inflation) would ease the pain fairly quickly, but we don't have that anymore.

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In fact, I am wholly disheartened by how little £200,000 can buy, which is the amount my mortgage can stretch to on £28,000 a year, even with a dizzy deposit of £60,000. A soulless 300sq ft basement studio in W10 is the depressing truth for such an amount. As I am intending to be holed up in my new home for a while and am reluctant to cull all loud, smoking friends who would dwarf it further, I extend my search above £250,000, feeling vertiginous and fearful as I do so.

Maybe she needs to change the area she is looking in then.

2 minutes on RM found this 2 bed place within walking distance of railway and tube stations.

http://www.rightmove.co.uk/property-for-sale/property-16808442.html

Looking at the reductions we've seen on property-bee on this one I reckon the vendor might accept £200k. Notice in the description it mentions "no-chain".

I'm sure any Londoners will be able to advise if such a place is in a safe area.

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I'm reluctant to take on a £200k mortgage and I earn quite a bit more than she does. I don't know how she thinks she can pay for that. It's not about multiples, it's just comon sense. Years ago, I'd say there was no harm in stretching yourself initially as inflation (particularly wage inflation) would ease the pain fairly quickly, but we don't have that anymore.

I earn around 100K, my mortgage is £160 and that s**ts me out some months, mind you I have a family as well.

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http://www.thisislondon.co.uk/lifestyle/article-23889164-prices-are-supposedly-falling-so-why-does-it-cost-pound-200000-to-get-

It's a panic for me, because while I have a 25 per cent deposit of £60,000, which is fairly high for a first-time buyer, my salary is low at £28,000. Tony says the maximum I could hope for is £125,000, about five times my salary, so I'd be looking for a £195,000 property. I could then get a blood relative to be a guarantor, but even that is harder now with lenders really prying into my parents' financial situation, then mine, to see if I could, in a few years, substantiate the mortgage by myself.

Hmm, unless I am missing something I think she shouldn't bother. Simply because she can't do simple maths.

£60K + £125K = £195K good luck with that.

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What a pure muppet, plus her mortgage is either interest only or on a variable at best!

She sounds like a wannbie property investor! I'm looking forward to hearing about how much that Foxtons tw@t loses on his flip, I can't understand how people can ever think a vase of twigs can add £75k to a property.

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What a pure muppet, plus her mortgage is either interest only or on a variable at best!

She sounds like a wannbie property investor! I'm looking forward to hearing about how much that Foxtons tw@t loses on his flip, I can't understand how people can ever think a vase of twigs can add £75k to a property.

You don't get it do you. It's twigs, in a vase, a vase of twigs. That's worth an extra ten grand right there.

Some well placed fluffy towels and the smells of baking bread doubles that to 20 grand obviously. Where were you bought up, in a shed?

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Has anyone seen something like this before?

Cost: £249,950 (formerly on at £285,000 — a lease clause prevents it from being rented out)

Where: Bassett Road, W10

Specification: 382 sq ft. Studio room looking onto lovely communal garden (albeit with mole problem). Non-offensive bathroom and kitchen.

Chain details: Singleton upsizing.

What it's like: Blissful tree-lined street near St Helen's deli's brownies, a bit bland but safe, with a dated, jaggedy kitchen and a garden to spill out into and scream if the walls close in.

Oh dear. So you wouldn't even be able to rent it out if you wanted to go abroad for a year or something or your job took you away for a year or so. Not very flexible is it? :o

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It's depressing that all she's doing is looking at how much of a mortgage she can get, even if she could get that much. Do people these days even factor in paying it now, let alone in the future? I never understood it in the boom, and I don't now. Why doesn't anyone's starting point seem to be "I can afford to pay £750 a month" (number picked out of thin air) and then go and see where that gets you?

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She sounds like a wannbie property investor! I'm looking forward to hearing about how much that Foxtons tw@t loses on his flip, I can't understand how people can ever think a vase of twigs can add £75k to a property.

You don't get it do you. It's twigs, in a vase, a vase of twigs. That's worth an extra ten grand right there.

Some well placed fluffy towels and the smells of baking bread doubles that to 20 grand obviously. Where were you bought up, in a shed?

Great minds and all that. They posted my comment on Chris from Foxtons at the ned of her article:

"he intends to buy something for £175,000 now, make some tweaks, and sell it on next year, April he says, for £250,000. His confident plan sounds assuring."

Chris from Foxton's plan sounds more like codswallop than anything else.

- Bomber Brown, London, 19/10/2010 16:12

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Hmm, unless I am missing something I think she shouldn't bother. Simply because she can't do simple maths.

£60K + £125K = £195K good luck with that.

With numerical ability such as hers, she will have no problem mistakenly putting an extra couple of zeros onto her salary when filling in her mortgage application form.

Edited by lulu

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With numerical ability such as hers, she will have no problem mistakenly putting an extra couple of zeros onto her salary when filling in her mortgage application form.

LOL

very good.

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...she is stretching many pounds too far...and this is not the time to buy....there will be a some real reductions soon ....in her position she should emigrate..... :rolleyes:

Edited by South Lorne

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Interesting article...

I like her trust in 'Chris from Foxtons', the property flipper, who hopes to pay for his wedding with a smart deal. He sounds ideal as an adviser........

I'm surprised he's not on The Apprentice....

I think he would get a glacial stare from the 'minted' one!

Chris has latched on to her like a limpet coz he knows she's an absolute mug & push over - "coz all her darling friends have got a place and she hasn't!"

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I think he would get a glacial stare from the 'minted' one!

Chris has latched on to her like a limpet coz he knows she's an absolute mug & push over - "coz all her darling friends have got a place and she hasn't!"

Insane. Does she understand anything about interest rates, job security, negative equity, ANYTHING?

BOM must be very well heeled and ready to jump in. I've got a 78k mortgage on a 34k salary, and it's a commitment..

Thank god I don't live in London, right enough.

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The simple reality is that she has not got a clue how she will manage on just £28k a year in central London.

£28k will leave her with around just £1830 per month and she must make sure her budget can cope with a rise in interest rates to say 6% (when her repayments will be £800 per month

She has not considered that in a block of flats she could well face a service charge bill running into 4 figures for major works

She has clearly not settled in her private life and would be far far better off renting-the transaction costs of buying and selling will not be recovered by rising house prices, on that we would all agree.

I feel anger not towards her but the culture of those who make these young people believe that only by buying can they consider themselves to be taking life seriously

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Great minds and all that. They posted my comment on Chris from Foxtons at the ned of her article:

Codd's used to make lemonade. Beer (wallop) drinkers derisively called bad/weak beer 'Codd's wallop'.

Meaning rubbishy, frothy stuff with no guts.

Very apt choice, bomber.

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Maybe she needs to change the area she is looking in then.

2 minutes on RM found this 2 bed place within walking distance of railway and tube stations.

http://www.rightmove.co.uk/property-for-sale/property-16808442.html

Looking at the reductions we've seen on property-bee on this one I reckon the vendor might accept £200k. Notice in the description it mentions "no-chain".

I'm sure any Londoners will be able to advise if such a place is in a safe area.

London is so big that for most people, you can't look for property by seeing what your budget can get you anywhere. That 2 bed place you found is nowhere near where she wants to be, and presumably she wants to be in W10 because it's easy to commute to work from there, her friends are nearby and she likes the area. She needs to accept that unless she starts earning a lot more money she should move to an inconvenient area she doesn't really like, or just keep on renting while waiting for the crash (fingers still crossed after several years...).

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A £160k mortgage on a 4.5% interest rate is £900 a month.

Add in the house insurance and you are looking at £1k a month minimum.

Your entire life will be spent servicing a debt.

What if you want a family, what if you fall ill, what if you lose your job?

Seems a hell of a gamble to me.

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I don't wish her any bad either, although she does look like she's got bools in her mooth

But for anyone to think this is a sane way to behave (shame on the Evening Standard) shows why London scares the hell out of me. This 'Oh London's different, everyone wants to come her' attitude, propogated by estate agents, toffs and the like strikes me as disingenous to say the least. London's just a hell of a big hole to fall down.

She should marry an investment banker who'll probably kill himself or have an affair. That'll set her up.

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  • 245 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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