Thoughts on living in an apartment?

[menthel]

I am in rough agreement with some of the sentiments given by Saracen and TheAnimus on the current market. Yes, there will be an 'adjustment' to house prices as people suddenly realise that all that credit is unsustainable (unless you have been sensible- The only credit I have is a mortgage that I can relatively easily afford to pay and can soak up any changes to the interest rates if needs be) and I can see some reposessions as those people with poor credit and 100% mortgages are caught out. However, I don't see a huge crash, especially in those places where property will always maintain a certain value and kudos.

Just remember that buying now you have to bear a few things in mind:

1) Only buy what you can comfortably afford- don't stretch yourself with monthly payments
2) At present a home should not be an investment but somewhere to live- if it is an investment you are looking for live at home with the parents and buy when the market looks like it has bottomed out
3) Buy the worst flat in the best area possible- doing a place up allows you to actually add some value to it- this could be useful once the economy is in the boom part of the cycle again
4) Be prepared with a large deposit- no large deposit= higher interest rates and also the chance of no mortgage
5) Be prepared for the long haul- if you think that somewhere will only suit you for a couple of years- forget it!

As for flat/apartment living- its fine but just don't expect much storage space! We have completely run out of storage space and are consequently having to move- and no it can't be chucked or sold. If a flat is leasehold try to speak to some of the other leaseholders and see how the management agency act and charge. The management company for our flats are brilliant and have good value service charge/ground rent.

Also consider buying a newer flat rather than an old conversion- better insulation= lower heating bills and much less likely to go wrong.

All in all, flats are great first properties, just remember that there are a lot of people in close proximity! Also, you can buy now, just you have to be in it for the relative long term and make sure you are clever with your purchase.

[Blitzen]

Is apartment just a posh name for a flat?

BTW...If you do buy a flat, make sure the couple above arent into naked gymnastics 4 night a week. Sleep deprivation is a bad thing.

[menthel]

Is apartment just a posh name for a flat?

I think so, that is why I kept saying flat!

[M0nkeyb0Y]

Is apartment just a posh name for a flat?

I always thought a flat was on one level while an apartment could be on several (i.e. have its own stairwell)…

mexican::mexican

Either way apartments have already dropped in value a lot more than houses (around me at least) due to them being chronically overpriced when they were newly built.

If you do decide you have to buy now you may well get a better price if you go for a new build: Developers know what’s coming and some are desperate to shift.

Take a look at Barratt Developments' share price over the last 14 months: almost £13.00 down to 90p. The only way these guys can raise the capital they will desperately need over the next twelve months is to get rid of all the stuff that's sitting empty that they're paying rates on. They have stopped building completely now, so this glut of supply will disappear soon.

If you take Rave's well documented view on the housing market you could miss the best opportunities; however I agree with him in that the worst is still to come. But as soon as people spot the bottom those bargains will go.

Perhaps renting and saving up a decent deposit is your best option for the next six months at least, for the time being prices will only fall… then you may be able to afford a house rather than apartment.

[Blitzen]

I always thought a flat was on one level while an apartment could be on several (i.e. have its own stairwell)…

Thats a masionette isnt it

[menthel]

Yarp.

[Sinizter]

To the original post, I have been living in an 'apartment' for the last year with my wife. Been no problems from neighbours and no real problems from outside people because its in a gated community and it has allocated parking spaces.

One bedroom flat for 2 people is OK, but not ideal. We have outgrown the space within this time and even if we were staying in London we would have bought/rented a 2-bedroom place atleast. Open plan might alleviate the feeling of smaller of spaces, but where are you going to hide the clutter ?

So to begin with, and maybe for a couple of years it will be fine. But it is not a real long term thing unless you actually really like the convenience they offer.

We are moving to suffolk now, and are in the process of buying a 4-bedroom house. I dont believe the house price crash will be anything as drastic and Prophet Rave has been raving about - and either case, the money will be lost in rent or on my own property. Given the two options, I would rather it was on my own property.

[staffsMike]

Just to high jack the thread a little, let's assume I'm looking to buy somewhere in the next year as a first time buyer (I don't mind renting but you can't do that forever), how long do you reasonably need to wait if the prices really are going to crash?

I mean I know the last time my parents moved the market was pretty much at it's lowest and so the house is worth roughly 4x now what they paid. Is it really going to be that low again?

[usxhe190]

pad > apartment > flat

[schmunk]

Thats a masionette isnt it

A maisonette has its own external door.

[Blitzen]

A maisonette has its own external door.

Ahhhhh...yep

BTW...as cruel as it sounds, but i am waiting to buy a second house and the price crashes could be just what i am looking for.
Houses have been drastically over valued and people have been borrowing up to the hilt just to get on the ladder (which is not a good idea).

Once the interest rates start hitting 8-9%, which i think is pretty likely, then the repossessions will start to flood the market.

If you cant beat 'em....join 'em.

As far as the apartment thing goes, i will be looking at them closely as they are easier to make a fast quid out of than houses.

[Saracen]

Ignoring the issue of whether it's wise to buy right now or not, anyone mind if I answer Parm's question?

The context of this question, though, was not just about living in an apartment, but whether it's the right thing to do, as opposed to buying a house?

Anyhow, we were originally looking at houses and we'd found a nice one that we liked. Trouble is, it's pretty pricey and we're now wondering if it's worth us spending a lot on our first place, or, if we should get started with something a little smaller.

In my opinion, it isn't the right thing to do. So my answer to that is to think hard about the situation. If it were me in his situation, I'd either rent or (if I can stand it) stay with family a bit longer, wait for prices to settle while furiously saving, and then go for the house. The reason is all the concerns that have been raised about apartments, that being noisy neighbours, "rogering" over service charges, etc.

Personally, the only way I'd even consider an apartment is if it was my only option. Having said that, I'm not a city boy and wouldn't live in a big one if you paid me. City dwellers, certainly in some cities, may have little option that they can afford, certainly as a first time buyer.

I think the house is a far better option than the flat, and the current situation with the housing market represents an opportunity for people in Parm's situation, if he can stand staying with family a bit longer. It represents an opportunity (or a probable opportunity) to jump one (maybe two) steps on the housing ladder. Rates for savers are decent at the moment, so save and take advantage of that. Mortgage rates are fairly high, and very likely going up especially if base rates go up, which looks quite possible). House prices look set to drop about 10%-ish over the next year and it could well be more.

If he wants an apartment, fine. But if he wants a house and is settling for an apartment, which seems to be the case, then given the issues with apartment,s and given that now seems to be a pretty rare opportunity in the housing market, I'd suggest sitting tight, watching the market carefully and then making the most of it.

One word of caution, though. I completely agree with those that talk about buying a home, not an investment. While I think housing will get through it's current slump and start to go up again (sooner or later), I'm inclined to think that we will not (at least for quite a long time) to back to the frenetic days of the last decade. The notion that houses inexorably go up by at least 10% per annum, year in year out, should now be well and truly debunked. Confidence in that notion has been punctured, and we won't see the speculative reliance n housing that we have seen ..... until people forget about the painful bits at the moment, anyway.

So given the problems with apartment,s and that Parm seems to want a house and be considering settling for an apartment, to point out that there are opportunities with housing, largely involving waiting a bit, is a germane response to his question.

In direct response to the question in the quote above, I'd suggest sticking with what he really wants, because he's got to live in it. Buying and selling a property is pretty expensive, so not the kind of thing you want to do twice if you can do it once. It could cost £10,000 in fees, taxes and charges. So, buy an apartment and find you don't like it and that's £10k down the toilet. Worse yet, if it's a push to buy at all, could you afford to move, Parm, if the apartment proves to be a nightmare? And are you going to be satisfied, if what you really wanted was the house.

Though it's also worth pointing out that neighbours in a house can be noisy too, unless you're detached. It's still a risk, though a much smaller one.

Parm, you need to be sure what you want, and if it's achievable.

The current climate represents an opportunity that hasn't been around for 10 years. For years, prices have been rising faster than most people could save, so the incentive was to jump now because if you delayed, you'd risked rapidly being priced out of what you could currently afford and having to settle for less. But right now, that's reversed. Savings are good, and as prices come down, things that aren't in your price range right now quite possibly will be in 6 or 12 months.

Or, something that is just in your price range now but means stretching yourself may well not mean stretching in 12 months.

Back in the late 80's, I bought a house that doubled in price over about 2 years. Over the next two years it halved again, more or less right back to what I'd paid. It didn't quite get back, but it was damn close.

How would you feel if that happened now?

Suppose you buy your flat for, oh for example, £150,000. How are you going to feel if in 6 months, it turns out Rave is right about the crash and I'm wrong about the "settlement", and instead of that £150k become £135k, it's become £75k?

Conversely, given my experience (at the turn of the 80s/90s) if that happens again (and it might), what difference would it make to what you would choose to buy if prices were half what they are now? If you can afford £150,000 (for example) now, and prices halve over a year or so, what will that £150,000 then buy you? It could be that that £150,000 will then buy you what would currently cost you £250,000 or £300,000.

Which begs the question .... given the current climate, is now a smart time to be making a first time buy?

In my opinion, no it isn't.

But it also has to be said that there's a lot of expectation and little hard fact in all thins. Will prices drop? Yes, I think so. I think it's certain, but it's not a fact I can guarantee. Even less so, by how much they'll drop.

And this isn't about buying an investment. I'm not talking about the "value" of whatever you buy, but that as it's a home, you are likely to be able to get much better value for money if you wait, and as a result, are more likely to be able to afford what you want as opposed to what you seem to be considering "settling for".

It's already (IMHO) a buyer's market, and getting more so by the week. I'm looking to move. There's a nice 5-bed detached place in a country location I've got my eye on. It needs doing up a bit (cosmetically), but it's in a lovely setting. I'd really like it. Problem is .... they want more than I'll pay. Price has already dropped by about £30k. They had one offer that they accepted, and it promptly fell through. Now, a few months later, it seems they've accepted another offer. Good luck to them. It looks like I may have lost it. Unless it falls through again.

Either I get it at a price I think it's worth, or I'll look for something else. Because, my experience over the last year is that people are waking up to the fact that their price expectations on what their homes are worth are unrealistic. They're only worth what people will pay. And, as the weeks go past, properties that were outside my budget are coming into my budget. My sights on what I can achieve with my current budget are going up, as time goes by. Meantime, my little pot of money is invested, and growing faster than at any time in recent history.

As soon as I detect signs that the market's downward trend is stabilising, I'll concentrate on committing. Meantime, I'll buy tomorrow IF I get the right property at the right price. But because it's a buyer's market, I'm not in any hurry to settle for less than I need to. If I have to wait it out, I'll wait it out. If the right deal comes along, even with a cheeky offer, I'll jump.

But as things are, I feel I can wait to get what I want rather than having to grab what's available or find I can't afford even that. And that's what I'm advising Parm - don't feel pressured to settle for less than you want, because what you can afford is getting better at the moment, not worse.

[usxhe190]

BEST thing about living in a flat? if you live at some of the fancy ones they have a concierge which means you can send stuff at the place and you don't need to wait at home to pick it up!

WORST thing about flats? Walls and management fees and locked in central services.

[TheAnimus]

the strange thing is people keep looking at the VALUE of a property, not the COST.

This is where they are going wrong. The main obstical to buying a house, and a house maintaing its value is getting a mortgage.

12 months ago this wasn't tricky, if you had £1k per month, you'd of found that you could borrow 5 times your income merrily, for 4.5% APR. Now odds are you would be 6.5% intrest. So your house is worth less, but the key thing to remeber here is that the same people are still priced out of the market, those on the ladder are still on the ladder, and enless you've been folish (going for a high LTV (Loan To Value, the ratio of equity you own vrs the bank)) your actually ok.

So don't confuse a fall in VALUE with a fall in COST.

Too many people do this, its a pet hate of mine. Too many people have been saying the skys going to fall in for 'years' often thrown about to validate their claims. You'd have to be a moron to think that someone who said something was going to happen years ago, getting the timing wrong by a factor of years means their advice is going to be true when it actually does happen. (read anything they say is bollocks and they might just happen to get it right every now and again out of luck.).

[kalniel]

If people cared about cost rather than value then the credit crunch would only be a figment of Mervyn King's nightmares.

[TheAnimus]

Point is Kalniel, the value can be anything, its the cost that determines if you can afford it, and if the bank will have to forclose.