How to find the key to a bargain
Sunday, February 05, 2006
It pays to tread carefully when getting your foot on the first rung of the property ladder.
The great crash that was meant to reduce the cost of that nice little two-bedroom Victorian conversion never happened. Instead, the price of a home is rising again as the market picks up. Last month alone, house prices rose by 1.4 per cent, according to the Nationwide. Had you bought a year ago, you may have seen the value of your home rise by more than 4 per cent, by the building society’s measure.
For many first-time buyers, it no longer makes sense to sit on the sidelines and pour money into their landlord’s pocket, and estate agents report that they are beginning to see the return of the same faces they first met six months ago. Many have decided to stop renting and start buying. But where do you start?
Although there was some slackening of prices in certain areas in 2005, there were no falls that were big enough to make a dramatic difference to the average first-time buyer. Research by the Halifax shows that nine out of ten of the most affordable towns are outside the South of England, with Gosport in Hampshire the exception. The lender says that Nelson in Lancashire is the most affordable town in the UK, with property prices just over three times higher than a first-time buyer’s average income. Here a new buyer can snap up a two-bedroom terrace for £55,000. But you would have a difficult commute if you work in the South East. Buy in the capital or Home Counties and you can expect to pay well over ten times what you earn for a home. In Gerrards Cross in Buckinghamshire, the town branded least affordable by the Halifax, you would struggle to buy a two-bedroom flat for less than £275,000.
The good news is that house-price statistics tell only a fraction of the story. The market is becoming increasingly fragmented. A property’s appearance, positioning and state of repair now has a greater effect on a property’s value than it did a couple of years ago, when the market was booming. If you are prepared to compromise you could find something affordable in the least expected places. For example, the average cost of a flat in Westminster in Central London is roughly £600,000. But Capital Agencies (020-7727 4000) recently sold a one-bedroom flat in Bayswater for £220,000. The property is just around the corner from Hyde Park and the shops. But it is relatively cheap because it is on the ground floor of an ex-local authority block.
Location, location, location might be a property cliché but it is even more important for those who are about to take their first step on the ladder. One tactic is to seek out up-and-coming areas. Buying on the periphery of a smart postcode or in neighbourhoods that are being regenerated can be a clever move if you spot the right places. In London the boroughs of Greenwich, Newham, Tower Hamlets, Waltham Forest and Hackney are hoping to benefit from the spin-off effect of the 2012 Olympics. Jules Pipe, the Mayor of Hackney, says that the borough has secured £109 million from Transport for London to improve rail services. That means more trains to Dalston, Haggerston, Hoxton and Shoreditch, although a Tube link remains elusive.
Improvements such as these can push up the cost of property in an area — but do not count on it. According to figures from Hometrack, property prices last year remained flat in most of the London boroughs that will be affected by the Olympics. Tower Hamlets was the only exception. Here prices have been rising since London won the Olympic bid in July.
Some property experts counsel first-time buyers against being too speculative when looking for a first home. It is also worth remembering that areas that have fast rises in property prices during a boom are often the first places to suffer a bust. As most first-time buyers trade up after a few years, it might be best to opt for a property that is likely to sell well even in a slow market. Look for good transport links that already exist and proximity to shops. Can you buy a pint of milk within walking distance? Good bars and restaurants near by also push up the value of your home. If the property is big enough to house a family, being in the catchment area of a good school will also help when you come to sell.
Edward Stoyle, of Townends in Putney (020-8785 4244), says that flexibility and an open mind are also essential. “People start off wanting a garden flat on a quiet road just off the shops on the high street. They end up realising that what they can afford stretches to the flat above the shops.” If your finances are limited, you may have to compromise. Stoyle says: “Something smaller in a central location is preferable to a bigger flat farther from the shops and public transport. A lot of people want a spare bedroom to rent out. In the end they just use it as a dumping ground.”
Nick Allen, of Allen Briegel (020-8946 2323) in southwest London, goes one step farther and advises first-time buyers also to think about maintenance when they view a property. “A Victorian conversion flat is generally more spacious than something newly built because the ceilings are higher,” he says. “But buyers must make sure that they are not going to have to pay a fortune in repairs. For that reason, a flat in a good-quality development can be more reliable.”
If you can drive a hard bargain, buying new can also make financial sense. There is an oversupply of new two-bedroom flats in certain areas and developers are keen to sell. Some builders aim to attract first-time buyers by offering to pay the stamp duty or the deposit. It is worth asking even if nothing is advertised; at the very least you should be able to get some carpets thrown in.
The Times online
The great crash that was meant to reduce the cost of that nice little two-bedroom Victorian conversion never happened. Instead, the price of a home is rising again as the market picks up. Last month alone, house prices rose by 1.4 per cent, according to the Nationwide. Had you bought a year ago, you may have seen the value of your home rise by more than 4 per cent, by the building society’s measure.
For many first-time buyers, it no longer makes sense to sit on the sidelines and pour money into their landlord’s pocket, and estate agents report that they are beginning to see the return of the same faces they first met six months ago. Many have decided to stop renting and start buying. But where do you start?
Although there was some slackening of prices in certain areas in 2005, there were no falls that were big enough to make a dramatic difference to the average first-time buyer. Research by the Halifax shows that nine out of ten of the most affordable towns are outside the South of England, with Gosport in Hampshire the exception. The lender says that Nelson in Lancashire is the most affordable town in the UK, with property prices just over three times higher than a first-time buyer’s average income. Here a new buyer can snap up a two-bedroom terrace for £55,000. But you would have a difficult commute if you work in the South East. Buy in the capital or Home Counties and you can expect to pay well over ten times what you earn for a home. In Gerrards Cross in Buckinghamshire, the town branded least affordable by the Halifax, you would struggle to buy a two-bedroom flat for less than £275,000.
The good news is that house-price statistics tell only a fraction of the story. The market is becoming increasingly fragmented. A property’s appearance, positioning and state of repair now has a greater effect on a property’s value than it did a couple of years ago, when the market was booming. If you are prepared to compromise you could find something affordable in the least expected places. For example, the average cost of a flat in Westminster in Central London is roughly £600,000. But Capital Agencies (020-7727 4000) recently sold a one-bedroom flat in Bayswater for £220,000. The property is just around the corner from Hyde Park and the shops. But it is relatively cheap because it is on the ground floor of an ex-local authority block.
Location, location, location might be a property cliché but it is even more important for those who are about to take their first step on the ladder. One tactic is to seek out up-and-coming areas. Buying on the periphery of a smart postcode or in neighbourhoods that are being regenerated can be a clever move if you spot the right places. In London the boroughs of Greenwich, Newham, Tower Hamlets, Waltham Forest and Hackney are hoping to benefit from the spin-off effect of the 2012 Olympics. Jules Pipe, the Mayor of Hackney, says that the borough has secured £109 million from Transport for London to improve rail services. That means more trains to Dalston, Haggerston, Hoxton and Shoreditch, although a Tube link remains elusive.
Improvements such as these can push up the cost of property in an area — but do not count on it. According to figures from Hometrack, property prices last year remained flat in most of the London boroughs that will be affected by the Olympics. Tower Hamlets was the only exception. Here prices have been rising since London won the Olympic bid in July.
Some property experts counsel first-time buyers against being too speculative when looking for a first home. It is also worth remembering that areas that have fast rises in property prices during a boom are often the first places to suffer a bust. As most first-time buyers trade up after a few years, it might be best to opt for a property that is likely to sell well even in a slow market. Look for good transport links that already exist and proximity to shops. Can you buy a pint of milk within walking distance? Good bars and restaurants near by also push up the value of your home. If the property is big enough to house a family, being in the catchment area of a good school will also help when you come to sell.
Edward Stoyle, of Townends in Putney (020-8785 4244), says that flexibility and an open mind are also essential. “People start off wanting a garden flat on a quiet road just off the shops on the high street. They end up realising that what they can afford stretches to the flat above the shops.” If your finances are limited, you may have to compromise. Stoyle says: “Something smaller in a central location is preferable to a bigger flat farther from the shops and public transport. A lot of people want a spare bedroom to rent out. In the end they just use it as a dumping ground.”
Nick Allen, of Allen Briegel (020-8946 2323) in southwest London, goes one step farther and advises first-time buyers also to think about maintenance when they view a property. “A Victorian conversion flat is generally more spacious than something newly built because the ceilings are higher,” he says. “But buyers must make sure that they are not going to have to pay a fortune in repairs. For that reason, a flat in a good-quality development can be more reliable.”
If you can drive a hard bargain, buying new can also make financial sense. There is an oversupply of new two-bedroom flats in certain areas and developers are keen to sell. Some builders aim to attract first-time buyers by offering to pay the stamp duty or the deposit. It is worth asking even if nothing is advertised; at the very least you should be able to get some carpets thrown in.
The Times online
