A first-time buyer guide to London property prices

Buying your first home in London means making the largest financial decision of your life at the point where you have the least experience, against people who do this professionally every day. The seller has an agent. The agent has comparables, market data, and a clear incentive. You have a mortgage in principle and a lot of tabs open.

This guide is about one part of that asymmetry: price. Not the process, not conveyancing, not mortgages — those are well covered elsewhere. This is about how London prices are actually set and how to tell whether the number in front of you is reasonable.

The asking price is a marketing decision

Start here, because everything else follows from it. An asking price is not a valuation. It is a figure chosen by an agent and a seller to generate interest, and it is influenced by things that have nothing to do with what the property is worth: how many other instructions the agent is competing for, how urgently the seller wants to move, what a neighbour got last year, and what the seller needs in order to afford their onward purchase.

Sometimes it is deliberately low, to create competition. Sometimes it is high, to leave negotiating room. It is rarely simply accurate, and there is no mechanism that forces it to be.

Why bedroom count is a bad way to compare

Almost every buyer searches on bedrooms, which means almost every buyer compares properties on the least informative variable available.

"Two-bedroom flat" in London covers anything from about 48 m² to 95 m². That is close to a doubling in actual space under a single label. Two flats can be advertised at the same price, in the same postcode, both described as two-bedroom, and one can be substantially better value.

Sold prices are public — use them

HM Land Registry publishes what every property in England and Wales actually sold for. Not asking prices, not estimates — completed transactions. It is free, and it is the single best-kept secret in property, in the sense that it is not secret at all and hardly anyone uses it.

What you want to know for any property you are seriously considering:

• What have comparable homes on this street sold for in the last 18 months?
• What was that per square metre?
• How has the local market moved since those sales?
• Where does this asking price sit against that benchmark?

Answer those four and you know more about the price than most buyers who view the property. Our guide to reading sold price data walks through the method and the common mistakes.

Leasehold: the thing that catches first-time buyers

Most first London purchases are flats, and most flats are leasehold. Three numbers matter enormously and none of them appear in the headline price:

• Lease length. Below roughly 80 years remaining, extending becomes markedly more expensive because the freeholder becomes entitled to a share of the value uplift the extension creates. A short lease also narrows your mortgage options — some lenders decline outright.
• Service charge. An annual cost that affects affordability every year you own the flat, and one that can rise. £3,600 a year is £300 a month that your mortgage calculation did not include.
• Planned major works. Ask directly whether any are scheduled. A roof replacement or external decoration programme can land a five-figure bill on each flat, and it is entirely legitimate for it to arrive shortly after you move in.

A flat that looks 5 per cent cheaper than its neighbours often has a reason, and the reason is often in the lease.

Where value tends to sit in London

Some generalisations that hold up reasonably well, offered as starting hypotheses rather than rules:

• Walking distance to a station is priced in heavily. The premium for being five minutes from a tube stop versus fifteen is real and large. If you are comfortable walking, or the area has good bus links, that gap is one of the more reliable sources of value.
• Ex-local-authority flats often trade below equivalent private stock. They are frequently larger and more solidly built. Mortgage availability can be more restricted, so check with a broker early, but the space per pound is often better.
• Main roads carry a discount. Sometimes an over-correction, particularly with modern glazing. Worth viewing.
• Top-floor flats with no lift are discounted more than most buyers find justified, if you do not mind stairs.
• A new kitchen is not worth what it appears to be. Cosmetic renovation is the cheapest way to add perceived value and the most heavily priced. Buying something tired in a good position usually beats buying something recently staged.

Making an offer you can defend

The strongest position is not the lowest offer, it is the best-evidenced one. Compare:

• "We would like to offer £520,000." — an opening position, and an agent will treat it as one.
• "Three comparable flats on this street sold in the last year at a median of £7,800 per square metre. This flat is 68 m², which puts it around £530,000, and it needs rewiring. We are offering £515,000." — a position with reasoning attached.

The second offer might still be rejected. Sellers can be unrealistic, and in a competitive market someone else may pay more than the evidence supports. But you will know at the moment of decision whether you are stretching beyond what the data justifies, and that is the thing you cannot recover later.

What to do this week

1. Pick two or three areas and look at what is actually listed rather than what you imagined the market was.
2. For every property you shortlist, find the EPC floor area and calculate price per square metre.
3. Pull sold prices for the same postcode and work out the local benchmark rate.
4. Rank your shortlist by value against that benchmark, not by asking price.
5. View the best two or three, and ask about lease, service charge and major works at the viewing rather than later.

None of this guarantees you a bargain. London is a competitive market and sometimes the right answer is to pay a fair price for something you will be happy in for a decade. The goal is narrower than getting a deal: it is to never be the buyer who paid 12 per cent over market value without knowing it.

Frequently asked questions