Forest hill or Crystal Palace?? Is London property risky?

[Dreambow]

Hi,
We are searching for a family home in south east London. We love areas like Balham, dulwich, Blackheath and Greenwich but can’t afford there. We have looked in forest hill and worried about how quiet it is on the high st and reports that the Dartmouth Arms pub is closing etc. Have only recently viewed in Crystal Palace so very new to us.
What do you think of forest hill vs Crystal Palace? Which area has more potential?

We are also worried about London properties falling in general as we would like to stay in London for 5 years and then move out and would hate to be in negative equity. Really open to any advice? Thank you so much

[JoJoSM2]

No one has a crystal ball to know for sure what’s going to happen to property prices. It’s ‘prime’ London that has been seeing the biggest drops so places like Crystal Palace should be less affected. If you’re young FTB then it’d be a fun area to be in.

[Kamma89]

Crystal Palace is much nicer & more established than Forest Hill but also more expensive.

People seems to be refusing to accept that the current economic situation might have an impact on London prices. They haven't dropped sharply, yet.

When we bought (SW17) a few years ago we had a huge unexpected inheritance & a combined household salary of £170k. We live in a standard family home, medium sized garden, on street parking, zone 3. Nothing special, yet our circumstances compared to many were. I personally couldn't imagine the wealth/salary required by the next person buying. Prices in London are unsustainable. They need to drop, a lot. If they will or not who knows. Will there really be that many 200k plus salary households willing to buy boxy overextended terraces outside of zone 1?

[onlyk]

You said you like Dulwich have you tried looking at Peckham or Nunhead which borders Dulwich? When I was buying in East Dulwich I found that it was a little bit cheaper in these postcodes but you still could walk to lordship lane etc

[EnjoyingTheSilence]

Try Brockley, Honor Oak Park and Ladywell. You’ll also get more for your money in Catford

[peanutsandpinenuts]

We've seen a small increase in value but of course there is no way to know what will happen in the next few years. In terms of areas both are great in their own way. Crystal Palace probably has the edge in terms of transport links, restaurants/bars on your doorstep, nice shops/farmers market. And there is also the gorgeous park which was amazing during lockdown (although the Horninan Museum and gardens are a huge draw for Forest Hill). Both areas are reasonably close together so perhaps concentrate the search on the area between the two, best of both worlds?

[Raifa]

Kamma is spot on on describing the current market. We re this next couple contemplating buying a house and the amount of salary and equity we need is pretty insane for a standard house in north London. There isn’t any crystal ball for me either, but I certainly see a lot more room for a fall than for an increase given how stretched the finances are for the average London household even before we enter the current recession. If it’s only for 5 years, you may want to hold a bit to see how things pan out over the next 6-12 months, you might be able to afford one of the area you mentioned initially.

[Greenhats10]

@Kamma89 - agreed sometimes in London I feel that everyone has 150k-200k household income circa age 35 (i.e. when people want to buy a house). Because a house on for 700k now is basically quite cheap but you'd need quite a high salary or equity to get even that let alone 1.3m budget ones. I also dont know many people that have made that much money on their flats since about 2016....so the large equity increases of yester years are gone. But people are still buying and prices are going up.

Personally, I marginally prefer Forest Hill - but am a sucker for a museum. If you can, buy a house - in SELondon they should hold their value better than elsewhere i.e. because they are not as crazily overpriced as pretty much everywhere else. But be prepared not to make any money on it in five years time. If you look on Zoopla/Richtmove - plenty of people would have only made 20-50k in the last few years i.e. cost of another move or something

[Dreambow]

Thank you so much guys. Really appreciate your thoughts. I think that even in a few months time we won’t have any real answers re property market. I think I would buy a property if the price was right and there is room for a fall but houses seem to be selling fast in forest hill. I do wonder though if they will go through as banks are stricter and not generally taking into account bonus/ overtime etc? Also wonder how the high street will do in forest hill during a recession as compared to Crystal Palace (which is more established)- would be worried buying a high st that may potentially have lots of shops/cafes closed etc. However as forest hill is less well established do you think it has more potential in the future?

We have friends who have been told that they never have to go back to the office to work and can WFH which will surely affect the property market as they do not need to be in London anymore....

We sold our house just before lockdown luckily and were looking to buy. Currently renting and just really unsure whether to take the plunge or not! As you can tell we are so confused as to what to do. I think there will be a 20-30% fall but my partner thinks 5% fall to small increase in property.

When you look at how much prices in london have increased over the last 10 years it is crazy but so many people do have large salaries/ wealth so keep pushing up prices.

[Yeknom]

Do you have children? Also worth looking at school catchments first future if you plan on having any. Im in South London, and super close to CP, I prefer it to Forest Hill personally as there is more there and the transport links are far far superior.

You also get a lot for your money in South Norwood. You could also look at Gipsy Hill (which is practically CP) and West Norwood along with Sydenham.

[NCParanoia]

Forest Hill is cheaper probably but CP is much nicer and more of a community (i live here!) there's the amazing park (and other small ones), lots of coffee shops and restaurants, 2 food markets, the CP festival, and good transport links from the bus and train station. You'll get more for your money on the Anerley end of the hill, less in Gipsy Hill. Id say CP is a safer bet as its more of a destination and will hold value better. Both my neighbour and my SIL just sold thier flats for asking price within 3 days though, so move fast!

[Dreambow]

We don’t have children yet but that’s the plan! We were set on forest hill as close proximity to Dulwich and has a village feel and we felt could do well in the long run as CP is already pretty amazing! Gipsy hill is a good shout - we will have a look, thank you :)

[JoJoSM2]

Would you be up for buying a fixer upper? If you add value through refurbishment, the prices would need to fall pretty drastically for you not to be able to get your money back when you decide to sell.

[Raifa]

@JoJoSM2 how does this work? Market in London is fully priced. If they buy a house 100k less than market value to spend 100k to do it up, they ll eat their cash rather than the bank’s and end up taking risk associated with unforeseen repair and under budgeting (99% of refurbishment basically). When it comes to sell in a down market they ll end up with a smaller deposit just as well.

[fishfrog]

Having lived in both areas I don't think Forest Hill has much potential to 'come up' if that's what you want, it has always struggled because of the challenging high street layout and the south circular.

Crystal Palace on the other hand is lovely but peak - a close friend is selling her very nice flat for almost what she bought it for six years ago, and has had no offers. I think values will fall in CP. Which is no good for your five year plan.

Anerley, South Norwood (better connected on the train than FH or CP) you are more likely to see an ROI. But even then I would expect it to be small.

[JoJoSM2]

@Raifa

The way the pricing works, it’s that eg a 3-bed fixer upper, unextended terrace is, say, worth 700k. Done up 4-bed (extension on the ground floor + loft conversion to make a master + ensuite) will be worth, say, 1-1.1M. The work will cost 200k. If prices stay the same, you sell at 100-200k profit. Prices would need to fall by quite a lot for you to be out of pocket.

[Raifa]

@JoJoSM2 that s a misconception, at least in a very liquid market like London. I ve looked at hundreds of properties and the wrecks never offer the sort of margin you are talking about. Sellers are not stupid. The only certainty is that the house will look as desired by the buyer. Unless the buyers are doing lot of the work themselves (but then the opportunity cost of not working needs to be included most likely) it’s very hard to extract a profit on a refurb in a flat market.

[JoJoSM2]

@Raifa

I do follow the market a fair bit (not CP or Forest Hil, though) and do agree that the margins vary by area. But it does take a fool to overpay for a fixer upper to the point where they can barely break even. Especially in an area where where there is quite a turnover and similar housing stock so there’s no opportunity cost involved.

[Dreambow]

Thanks everyone- we would be very happy to take on something that needed work but obviously at the right price as some become money pits.

Fishfrog- thanks for your view on forest hill especially as you have lived in FH and CP. I would be keen on FH if the area has potential to take off a bit more but was also worried about how many businesses are still not opened on the high st/ empty and it makes me worried that the area will never really take off. Also the south circular is crazy busy and that’s never going to change! Does anyone have any other views on the two areas? Thank you!

[RicStar]

I think there is more opportunity for the market in London to fall than for it to make large gains, I wouldn't buy for capital growth right now. Gains are more likely if general inflation happens. I feel like areas you can cycle to work in central London or that are lovely in their own right will do better than fringe areas- so actually the opposite to now / recent market trends - what a lot of people are saying. I feel people will 'move in' if prime and then semi-prime area prices start falling. I wouldnt therefore look at fringe areas like South Norwood. I much prefer Crystal Palace to Forest Hill as a place in its own right. Like all other speculation on London market - I could be completely and entirely wrong.

[fishfrog]

Just to add @Dreambow Forest Hill had its moment to come up about 6/7 years ago, there were cafés and bars opening, the butcher etc, but because of the layout and traffic the footfall was always really challenging and the Lewisham renaissance somewhat passed it by in favour of Sydenham and Catford.

[RicStar]

@Dreambow which two other areas? And what is your budget? Have you looked at West Dulwich se21 which is cheaper than East Dulwich.

[fishfrog]

Also on South Norwood - also lived there - the stock is much cheaper, a lot of doer uppers available and some nice pubs, you have Mamma Dough, cafés, the yoga studio, the cinema club, the Lakes are nice, the library has great free baby classes, it has definitely improved dramatically since I moved there about three years ago and I certainly found a nice sense of community.

[JoJoSM2]

In terms of ‘coming up’ I don’t think there’s much to it between Crystal Palace and Forest Hill in terms of the demographics or levels of deprivation? In terms of shops, I’d imagine that residents from Forest Hill will often go to hang out in East Dulwich whereas Crystal Palace has a larger ‘catchment’ and the triangle just has a pleasant ambiance so is a more likely place for businesses to survive. I’d imagine CP would be a better bet from the point of view of shops/restaurants surviving.

[Puffthemagicdragongoestobed]

What's your budget OP? If you are looking at FH I would definitely look at Honor Oak, as this avoids the South Circular and has a little, albeit quieter, high street. You have nice green spaces like Blythe Hill and you are very close to East Dulwich. Transport is pretty good too, with the Overground and the train to London Bridge, and Thameslink in Crofton Park. Primary schools in the area are decent.
I am surprised by a previous poster saying that transport is superior in CP over FH. CP is at the end of the Overground line, so if you wait at Canada Water you will have fewer trains to choose from than if you need to go to FH. But maybe I am missing something.

[Twizbe]

Have a look at Sydenham / Penge. Cheaper than forest hill, just as well connected, closer to beckenham and really nice place to live with a family