Tips for First Time Buyers in London
22 April 2015 3090 Views
London house prices rose year-on-year at a figure of more than 18% in 2014, with the Metropolitan area experiencing similarly huge gains of over 10%. This sets the average London house price at well over £360,000.
The ripple effect emanating from multi-million pound investments in the centre of London have transformed the capital; between 1996 and 2007 – the golden era of the property boom – London house prices rose 289% which was bound to have an effect on the suburbs.
This will certainly mean that many young people will carry on having to rent in the capital, which can be hard enough in its own right. Two-thirds of under 35s are trapped in the rental market and in London rent doesn’t come cheap with monthly rates in the centre of the city averaging out at over £2,500.
This would point to solutions like Rent Caps but buy to let in the capital would become economically impossible for landlords considering the high purchase prices which wouldn’t yield any return on investment. This would mean houses would be sold en masse and there could then be a potential price drop, but you’d imagine that the clamour for property might cancel out any real market crash.
London is always going to be expensive but the right strategy in the right catchment area could just make it feasible.
A recent survey has found that one quarter of 20-34 year olds are still living at home, but this can’t be seen as a solution for a government looking to afford its citizens the dignity of owning a home. There’ll also be a significant amount of boomerang generation kids who leave home to go to university with the full expectation of having to return home for a few years in order to save a deposit for a house.
Those living in the capital can turn their attentions to emerging suburbs like Haggerston, Acton Town or Sydenham for cheaper rents, but with prices still dabbling over the £400,000 mark for a two bedroom house, rent may be the extent of it.
Help to Buy can be a decent proposition in London because it’s likely that with house prices rising at the rates they are, you’ll own that all-important 10% of the property in two years and you can re-mortgage to a better rate. Shared Ownership could also be a serious option; this requires you own at least 25% of the property’s value and pay rent on the remainder.