Where to buy in London: top tips for first-time buyers looking to get on the property ladder

Buy centrally or in a period conversion are the top tips for first-time buyers looking to get on the property ladder.
Ruth Bloomfield28 February 2019

Buying a home is like a game of chess. For every move you make you need to be able to think one or two steps ahead.

London’s lifeless property market — thank you, Brexit — is a great opportunity for first-time buyers to step in and negotiate price discounts.

And since tax changes have driven many investors out of the market there is less competition for starter-style flats than in the past.

“An unsettled market is normally a good thing for first-time buyers, and prices have definitely softened in London,” says Paul Cosgrove, director at estate agent Finlay Brewer.

“First-time buyers have the opportunity to jump into a more central location than they might have thought previously.”

But most buyers also rely on their home going up in value in order to help them step up the ladder after a few years.

And this is the tricky part because everybody agrees that the days of dramatic, life-changing price growth are, for now at least, a thing of the past.

According to Savills’ latest five-year market forecast, prices in the capital will fall by one per cent this year and be entirely flat during next year.

In 2021 it sees a return to price growth of 3.5 per cent, just about the level of inflation.

In 2022 buyers are looking at price growth of between one and 1.5 per cent, and in 2023 there will be price growth of somewhere between 3.5 and four per cent.

What this means is that anybody who buys a property today can expect to “earn” around 7.5 per cent over the next five years, or around £30,000 on a £400,000 property.

If this forecast is correct, first-time buyers have a couple of years to find their perfect home, so there’s no need for a mad rush.

And those whose lives are likely to change — moving in with a partner, having a baby — need to think about buying a home that is reasonably futureproof, rather than assuming they will be able to dance easily up the ladder over the next few years on the proceeds of their starter home.

For singles and young couples Cosgrove’s advice is to buy quality, and stay central: “We would advise first-time buyers to go as centrally as they can afford, in order to reap the benefits of potential future price rises,” he says.

“Buy second-hand if you can in a quality period conversion.”

Buying off-plan

Worth the risk: Georgina Wilson bought off-plan at The Ram Quarter in Wandsworth, paying a split 20 per cent deposit and waiting for her mortgage loan

When Georgina Wilson finished university, like so many graduates she returned home to plan the rest of her life.

She secured a job in advertising but decided to remain with her folks for a couple of years while she saved up for a deposit on a flat.

Her stay at home, in Fulham, in fact ended up being for five years, because Georgina’s route into home ownership has been slow, and rather brave.

In late 2015 her house hunt took her to The Ram Quarter (theramquarter.com) in Wandsworth, at the former Young’s brewery that closed in 2006.

The site is now seeing a £600 million redevelopment that will include more than 650 homes plus shops, cafés and restaurants.

But there was a catch, in that Georgina’s £500,000 one-bedroom flat was not due to be ready until spring last year.

She bought off-plan, having to pay a 10 per cent deposit in the first year and another 10 per cent in year two.

Splitting the cost helped her to save up, and moving to a rental while she was waiting simply made no sense.

She took a leap of faith on the flat, reassured by the fact that as a new build it would come with a 10-year warranty against structural problems.

"And it helped that my brother had done it a couple of years before, and everything worked out for him,” she says.

Buying off-plan means buying without a mortgage in place. Lenders won’t agree a loan until six months before completion, which adds an element of risk to proceedings.

“I just tried not to think about it,” says Georgina, now 27.

Happily, she was able to borrow the money and now splits her £1,300-a-month mortgage with her boyfriend.

“It has all worked out great,” she says. “It is a really high specification, and I really love Wandsworth, so I haven’t got any complaints at all.”

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