To expect guaranteed profit from zone 2 flat?

[nessus]

I need some input / handholding as my crystal ball is currently in for repairs...

Planning to move back into London from 'naice' Kent (west).

I'm looking for a 2 bedroom garden flat with share of freehold in zone 2 conservation areas with decent transport links.

Have my eyes on Shadwell / Camberwell / Limehouse / Brockley

Hoping to get something for 550k but could stretch to 600k

Which of these areas is the safest best i.e will most likely sell for at least 800k within 5 years?

Thoughts, links, suggestions, dissent all welcome!

There are no guarantees. The economy has crashed before. Anything could happen over five years. Anything could happen next week if Boris Johnson starts a trade war with the EU. FFS, GB News are debating if actual war should be declared on France. Debating - meaning they've found people supporting it!

London property has been really stagnant price wise for a long time.
I think those sorts of returns in 5 years are very very unlikely.

Seems really unrealistic to me.

No such thing as 'guaranteed profit' when it comes to house-buying. Just do your research.

There are no guarantees- who would guarantee it?

It’s a gamble like all investing

However, if you do your research the gamble becomes less risky

Probably best not to move to Camberwell or Brockley

Camberwell may well have peaked because it was already very overpriced in 2010

I'd be extremely surprised you could make 200k in 5years. Seems very steep to me. Maybe 50k is more realistic

No guarantees and id be shocked if you cleared 300k in 5 years but brockwell would be my first choice on that bad list.

Your best bet is to buy a fixer-upper which you can add value to rather than something already immaculate, and to research the catchment areas of outstanding schools where parents will always want to pay a premium to live. Even then, it’s not guaranteed (fixer uppers can end up costing much more than you expected; schools can decline) and I think the days of hoping to make up to a quarter of a million pounds of profit in a handful of years are long gone. You need to be far more realistic.

Your budget won’t get you much choice in what you want in Shadwell or Limehouse. It may in the other two.

Now that a lot of people can have jobs in London without having to actually turn up there every day plus the pool of people able to afford higher and higher prices must be shrinking daily, it seems rather optimistic to expect 30%+ price growth in five years.

Flats aren't selling well since the pandemic as everyone wants a bigger space. Harden flats have the garden but they also have upstairs neighbours. Both those things will affect the selling price.

For £500-600K you'll get a 3/4 bed house in somewhere like Streatham ( zone 3) which is going to give you a much bigger return in a few years.

Source: Have lived in London my entire life, currently in Streatham.

I bought a flat 5 years ago in an area guaranteed to make money. It's....
gone down in value.

Good luck!

You're not going to make that percentage profit in that short a space of time.

You’ve probably got more chance of making that staying where you are in West Kent 😬

I can’t see anywhere in London being guaranteed to rise by that much, if at all.

I doubt that anyone buying now will make a decent return until the market stabilizes back to something reasonable. I know of several homes that have sold on the premises of working from home, fewer outgoings etc and then have been put back on the market months later.

I don’t think you’ll get those returns either, although I don’t know Shadwell or Limehouse.

£800k for a 2 bed garden flat is Clapham/Islington/Fulham/Queens Park prices. None of the places you've listed are going to be anywhere close to achieving that in 5 years.

You'd have to hope for huge growth of the overall market to drag a Brockley flat up to Fulham prices!
The London flat market has been pretty.. flat for the last couple of years, even taking into account the stamp duty holiday. The concerns around inflation and interest rates aren't going to do much to boost the market in the short and medium term. To achieve your insane profit expectations, you need strong growth every year for the next 5, and its almost certainly going to be a very flat market for the next 1-2 years

None of the areas you've listed are up and coming so they won't outperform the market
They don't have any new tube stations coming, any big developments etc. They will probably tart up around the edges, but you're not taking a gamble on an area that will be the next Catford/Tooting and you're not going to get that sort of growth

If it was that easy, everyone would be doing it!

I agree the pp comments.

In 2019 I sold a 2 bed flat in Zone 1 with a balcony for double what I paid for it. Just a year later I might've struggled to sell it at all

You do your research and hope for the best but fundamentally you are buying a home aren't you. (Unless you are a buy to let investor).

I don’t think you can do it. I’ve lost £50K on a zone 2 flat recently. London market is not good.

And having lived in Camberwell in the past I wouldn’t want to do so again.

Good luck. I had to deal with negative equity back in the late 80s/early 90s on a flat in South West London (zone 3). It lost a quarter of its value in five years. Had I stayed there another 35 years, it's now worth ten times what I paid. How long are you prepared to wait?

They are falling and will fall further
In central London currently listing at 2017 prices and selling at 2014 (which as uplift after 2009 crash)

Personally I dont think they will rise again quickly. The rental market is bonkers- so people will rent and try and sit it out.

You can get a lovely 2 bed in the middle of Westminster for that much (well less actually)

Converted houses are generally less attractive than purpose built Victorian/Edwardian

Example of flat I viewed
Sold in 2014 for £499K and in 2018 for £550k
On at £550k for over a year. Apparently they will take £475k. Still not takers at that.

I am thinking of paying £430k for a zone 1 flat. They bought for £400k in 2013. Last similar one sold in early 2019 for £475k. Another one sold for £550k in 2016. No way will we realise profit after fees and stamp duty if we sold in 5 years. The current sellers have renovated and extended the lease- so I imagine an actual loss.