Is London at top of cycle?

zxcvbnm said:
Hey Lorna,
I'm thinking of buying a 41 sq. mtr. 1 bed in the old highbury stadium in islington.

What do u think of the area and what do u think of tha price given it will take 2 years to cmplete?It costs 335,000 stg.
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I think this makes no sense ... but I'm not familiar with the rents you can get for this property. However, if I guessed you could get £800 per month for your 1 bed, you are still only getting a gross 2.86% rental yield, before you pay letting and management fees, ground rent and service charges which I bet will cost at least £30 per sq m per annum. Your net yield will be about 2% - and you will be borrowing at what - 5.25% to 6%? That is a huge cashflow gap you will be plugging every month from your regular earned income.
 
lorna said:
all my mortgages are interest only, not repayment, otherwise you couldn't do it. i am not concerned with paying off any of the mortgages as investments are based on a 10-15 year plan and then i am selling up. i bought a 1 bed for £60,000 in 2001 just as property was taking off which is now valued at £145,000 hence i am not bothered about paying off any of the loan as no matter what happens i will make money anyway even after paying CGT. i bought a 3 bed house for £125,000 in 2001 and its now worth £275,000 at least and no i havent paid a penny of the actual loan. i pay very little tax on the rent profits as all the interest is tax deductible, plus every other expense i can claim for including my accountants fees.
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Okay, fair enough, so even if property went belly up by the time you sell, you have enough value across your whole portfolio to ride out the storm (i.e. you win on some and lose on others). I suppose, though, it's back to the OP's question - is now a poor time (close to top of cycle) to start investing in London (as they will not have the property bought in 2001 with lots of equity in it)?

Do you have fixed rate mortgages or variable?
 
i have mostly 5 year fixes, i pay a bit more for this comfort but then i can sleep at night !
propman, you will get a few hundred per week not month for a flat in highbury !
i am currently achieving £675 for one bed flats in north east london for a fraction of the price you would pay in highbury.
property is very expensive in highbury and islington, that's why property prices have improved greatly in stoke newington, hackney etc.
yoganmahew, did you look on rightmove, there is a huge amount of good looking 2 bed top end conversions for the same kind of money you mentioned. lots of the city professionals share these flats as it is the only way they can afford the rent on these upmarket pads.
 
Firstly well done Lorna - knows market and customers etc as above

If you are going to buy in london today ignore 2001 / 2003 to 2007 gains.
Alot of property in london is up 50% / 60% from 2003 ( except a raft of the new builds ). This has followed the financial boom in that period.

It will be difficult to make capital gains in the next couple of years.

Any upsets on the financial boom and prices could fall back 10% or more. There has been a period of madness there for past 15 months which is dependent on financial boom conditions continuing - if they don't then alot of middle class will be squeezed. Alot of assumptions about boom have been made which is dangerous. many good earners need a few years more of strong bonuses to get their mortgages under control
 
MOST VULNERABLE COUNTRIES
New Zealand
Denmark
UK
Norway
Sweden
Source: Fitch
 
MOST VULNERABLE COUNTRIES
New Zealand
Denmark
UK
Norway
Sweden
Source: Fitch
Click to expand...

Lorna, do you know what the 3 least vulnerable countries were?

Am sure they said Germany and two others.

Can't find the full link anymore.
 
Recently I have been speaking to a developer friend of mine in the London and greater london area. He seems to think that the market has still got legs. He did say that he does not expect prices to increase greatly but sales should remain strong for the next 3-5 years.

He is building 350 apartments a year, so he has a lot riding on this call.

Jaid
 
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