Why is this studio so reasonable? Is it area

[Thatwaskindoffun]

My DC is a first time buyer ideally looking to buy not rent in London, yes I know London is massive and it varies from place to place. I know nothing about buying in London at all and just assumed anywhere would be out of their price range but it seems I might be wrong.

As an example, yes this is a studio but other than that is the area awful or is there something else I’m missing as there seems to be more available in their price range of £200k than I expected

https://www.onthemarket.com/details/19249305/

Were you really savvy, or did you just hitch a ride on the biggest debt/property bubble in history?

Rest of your advice is excellent BTW.

Well possibly except that my dad told me that in general house prices had, for the longest time, doubled every 7 years or so, and that's what mine did, so it wasn't in the middle of some major high or anything. My mum was the one who taught me what to look for, and what to not worry about.

I also did the opposite of my friends in that I got a 2 bedroom, bathroom downstairs terrace because I didn't care about that, or the area, when they were all renting in Clapham, and Battersea etc. I also let my second bedroom for some of the time which made a huge difference.

I knew that in the end every part of London gets pushed out to some extent, and at that point I just wanted something that wouldn't lose money. I was away a lot for work, and if I went out with friends I could stay with them or them with me.

So no, I wasn't earning more than the average, and a lot less than most of my friends, and I didn't end up with millions. What it did do is get me on the ladder, and I'm really lucky but also proud that I went for it by myself. It was unusual and scary at the time.

There is no meaningful comparison re property in that area and anyone who would buy that studio at more than £100k is a mug.

Sounds good, I think the seven year thing was back in the days before the massive cheap credit expansion and due to natural wage inflation? IMO the massive credit bubble has to properly pop before we can go back to "natural" house price inflation.

I was interested enough to look it up. The average London salary at the time was 25k. I was earning 28k.
The average price of a 2 bed flat in Clapham was 150-200k (with a wide margin obviously).
I paid 75k for my house. They're now about 425k.
Clapham average 580k.

The bit that no one ever talks about is salary stagnation.

I've lived overseas for years, and occasionally I look at the jobs in the UK, and the salaries are utterly shocking.

For the level I was at when I left 20 years ago, the salary (40k) has hardly changed.

The salary dh would get for his very different job, has hardly changed.

I'm not saying at all, but maybe 20%?. Considering it's been 20 years and house prices and utilities and everything.

I'm realising that the people who say "the rich make us turn on each other so they can carry on getting richer" are probably not far off the mark.

I do agree with you and the interest on the mortgages is also wasted money if you want to look at it like that.

Also, such much snobbery re studio flats or flats in general. It’s easy for someone to say they wouldn’t live in one when they are sitting in their three bed house they purchased for £20,000!!

Yes, the property bubble was a nice distraction from stagnant wages/salaries, no one noticed or cared when their houses was "making more than them" every year, it was an odd little fantasy moment in UK history, people were lulled into stupidity thinking they were well off while the really rich kept milking them.

Yes, doing the interest calculations on various borrowed amounts is eye opening, people used to ignore that though because the "monthlies" were cheap. More sellers should work out the mortgage payments needed to buy their house, and realise how overpriced they actually are.

@Thatwaskindoffun they absolutely have, the market is flooded with I think 75% not selling.
And studios have the most limited market for resale.
If he wants to buy now he could probably get a 1 bed around that area for his budget, people who really need to sell are having to take low offers.

He might get a deal, but he might not want to stay in London, he might get offered a job somewhere else and want to move again in a year or two, being attached to a mortgaged flat is just going to hold him back, renting it out could be a living nightmare and really not worth the drama?

Unless he's confident he would want to stay in that flat indefinitely, he'd also effectively lose the benefits of being a FTB like I said a few days ago if things go wrong and they could very much wrong - negative equity, increasing service charges that become unaffordable, he loses his job and can't pay the mortgage, no other bedroom for a lodger if times get tough, he rents it out but can't afford to maintain it, rents it out and gets a nightmare tenant who stops paying rent and has to pay court costs and the mortgage on the flat as well as his own housing costs. I'm guessing @Thatwaskindoffun's son doesn't want to share, but that choice could be a catastrophic mistake.

If he doesn't know London then I'd definitely say it's far, far too early to buy. Particularly if his job may end up being somewhere completely different.

I think it is absolutely imperative to get to know London before you can decide on which areas you would possibly consider to live in, and which areas you definitely wouldn't get on with.

A cheap house share with people of a similar age would be a great way to get to know the place, and presumably cheaper than renting a whole flat to himself (it was almost a rite of passage when I first moved to London).

After that time - if they've decided that they want to stay in London and have decided which areas they would be comfortable in - I agree with several pps that a studio flat would be less than ideal, particularly if there are one beds available for a similar price. That would build in more growing room.

The other thing to consider is the mortgage period. My uncle gave me excellent advice to get a 15 year mortgage rather than the standard 25 year - obviously this will depend on whether the finances permit - but this saves a very considerable amount of interest over the period, making it much cheaper in the long run.

Spare room is a good point, lodger in times of need, but if you get a nightmare lodger that is even worse than nightmare tenants because you are living with them!

Good advice. The shorter your mortgage period the more confident you can be in keeping your head above water - the less stretched you have been. Unfortunately, it's now common to go for mortgages greater than 25 years. This will almost certainly lead to a slow motion train wreck for many. It really shouldn't be allowed except, perhaps, for existing mortgage holders already in distress.

Ideally everyone would have short mortgage periods, but most people wouldn’t be able to afford the monthly payments (if they got approved). Additionally, if the 25+ year periods didn’t exist then that would cause even more strain on the creaky rental market.

If the 25+ year market didn't exist then house prices would be markedly lower and would relieve pressure.

I agree it can be very difficult. But it's worth considering, and looking at the payments if you change the repayment term it can be surprising how little it changes.

I just looked in Epsom. There are lots of flats on for between £100- £200k. Just because somewhere has 'London' on the address doesn't mean that it's easier to get to London proper than somewhere further out. Being on a tube line would be the ideal but adds a lot to the cost. Areas where you end up on a bus to get home are cheaper but it really is very time consuming. Whereas Epsom has loads of trains that take 30 minutes to Waterloo. You couldn't get to Waterloo in 30 minutes from Norwood.

The location of the studio in the OP is FINE!

Young FTB in London don’t want to be languishing away in the suburbs further out, the crime is LOW, and most young people do not have the suburban terror of MNers who won’t go out after dark etc

Lots of us live in areas squeamish MNers look at in horror, and amongst good community minded people who also can’t afford bougie areas, but want to be out late in Town on a frequent basis.

OP: maintenance and service charges can be the killer.

Also, such much snobbery re studio flats or flats in general. It’s easy for someone to say they wouldn’t live in one when they are sitting in their three bed house they purchased for £20,000!!

This. I bought my tiny flat in pre-gentrified Brixton when on a low salary in my late 20s - couldn’t have bought anything else since had I not done that.

And I had a great time.

But the observations about not risking into buying before you get a really good feel for life in London are well made.

100k sounds cheap for Epsom, any links?

The houseboat is much nicer than that.

Brixton, in zone two, with frequent buses, an overground station and tube station with other decent amenities (even before the gentrification began) isn’t / wasn’t comparable to living on a council estate in Upper Norwood with fuck all on your doorstep and Crystal Palace station a twenty minute walk away.

Take a look on right move at 1+ bedroom flats in Penge max price £220k. There are some lovely ones there. I live in West Wickham now, Beckenham before that and Sydenham/ Penge when we bought our first home in the early noughties. Penge has really become quite cool. I was there last weekend buying my coffee at the local roasters. It’s somewhere I’d definitely encourage my son to look at.