The Mortgage Clinic

From London’s Independent:

‘I’ve saved a 10 per cent deposit that finally allows me to afford a studio flat in London for about £170,000. But, with all this uncertainty about house prices, I’m wondering whether to hold off and save for a one-bed flat. I’ve been told by estate agents that studio flats are hit hardest by price falls. Why? JH, Weymouth

Studio and one-bed flats often bear the brunt of a housing slump by dint of simply being at the very bottom of the UK property pile.

When prices fall, first-time buyers try to see if it’s possible to "trade up" to get more for their money, says Richard Morea of the mortgage broker London & Country.

"If the fall is sufficient to bring one- and two-bed flats within the range of first-time buyers, the traditional first rung of a studio flat could be bypassed – putting further downward pressure on its value."

"If your property falls in value by more than 10 per cent, which is not unreasonable over the next two years, and you only had a 10 per cent deposit, your mortgage will be more than your property value and will create negative equity," she says.

If you were to keep on saving for longer, there’s a chance that property prices will fall as you build up a bigger deposit, says Mark Harris of the broker Savills Private Finance.

"This will then allow you to afford a larger property, but there is a big jump between the cost of a studio or one-bed flat, and a two-bed flat.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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