If your house is worth £1m+....

[cumlaude]

Where I live, SW London, there are rows upon rows upon rows of streets of average looking terraced houses worth £1m+

I can't imagine everyone living in these houses earns the £200k single income, or two people earning £100k each, to secure such a large mortgage plus a very hefty deposit.

So if you live in a house worth £1m+ how did you afford it? Did you ride the London property wave, inherit some money, or just earn loads?

FWIF I'm a renter in a share house and I'll NEVER be able to afford to buy in the area I currently live.

(Also a prolific name changer on MN in case anyone starts yelling at me that it's my first post!)

I hear you.

I didn’t grow up knowing about the mechanisms of money and it’s been one hell of an education.

If I were starting out in London today, I’d carry on living in a house-share and buy a buy-to-let somewhere in a northern city I could see myself retiring in. I don’t think we’ll have capital gains like we’ve seen in the last few years again in our lifetime, but there’s very little scope to raise interest rates either. In time you will also benefit from the demographic bulge, as there are an awful lot of pensioners living in £1m+++ houses but not enough thirtysomethings able to buy from them.

The thing is though - all those people with properties now worth 1m+ will be facing the same massive hike struggle if/ when they wanted to move up because bigger properties have shot up exponentially. So all those two/ three Bed terraces worth 1m - how much would you be facing if you wanted to move to a four bed with huge garden/ driveway/ garage etc?

Just because their houses have massive equity in doesn’t necessarily mean it won’t be a push for them to move up. If they want bigger, they can’t necessarily have it in London either. It’s so messed up.

Which makes me feel slightly better as we struggle to get on the property ladder as FTB’s in London. I don’t mean that snarkily. A friend pointed it out to me and it made me feel better in the sense that I didn’t feel so powerless and fucked, property-wise! It’s all exponential.

My husband bought ours (before I met him) back in 2007. But to be honest if you aren't planning to move out of the area to somewhere much cheaper, it doesn't really matter how much the house is worth on a day to day basis. If we wanted to move somewhere equivalent it would cost the same or even more so we aren't going to suddenly be rich if we sold!

@RedCrab generally, the areas with the 1M 3-beds are, don’t have 4-bed detached with garages (as they tend to be tightly built up Victorian suburbs). But you can easily get that for under 1M in outer London. Here’s one in a lovely area in zone 5

www.rightmove.co.uk/property-for-sale/property-73117091.html

I don’t think it’s that difficult to get on the Property ladder in London if you’re a childless couple in professional jobs.

My parents bought a modest house for £14k 35 years ago in Greater Manchester. At the same time, an Uncle and Aunt bought a similar house in Greenwich for £30k. My parents house is now worth £110k tops, while the house in Greenwich must be worth £1m. It's insane really.

We live in a 4 bed detached with a medium sized garden in Oxfordshire and we'd have a bit of change if we bought that lovely house in County Down linked to above. I know location is everything but I still can't get my head around London prices.

(Not all these apply to me), but:

• parents passing away early, large inheritance
• previous property massively going up in value due to eg. Gentrification of parts of London
• working in an industry where you get big bonuses eg finance so can build up deposit quickly

My parents bought a modest terraced house in Putney in 1986 for £70,000. They've always rented it out so it's one of the few houses on the street that have had virtually nothing added over the years.

It was recently valued at £975K but the two houses either side, that have extended upwards and backwards, are worth £1.2M and £1.4M.

The Victorian terraced house that we used to own in South London was last sold for just over a million. We bought it in 1995 for £116,000 and sold it five years later for £330,000. We have been lucky that every time we move it has been to a place that is just about to improve in popularity and therefore in price, that hasn't been a calculated thing just practicality of moving to somewhere that is both convenient and pleasant.

Yes Constance1234 moving up isn’t easy, once you’ve got your loft done, you just end up looking at more of the same in a slightly different place.
Any big house at a reasonable price gets bought for development and then sold on.
I don’t want to move out to a big house if it means I lose the huge location advantages.

@JoJoSM2 generally speaking, I guess I was thinking more about how prices have risen exponentially for everyone.

I live in south east London, a little suburb in zone four. Excellent transport links and streets and streets of new build apartment blocks but also many, many streets of older 30’s style semis - the ones with the round bay windows, driveways and large gardens with garages. My friend bought her 3 bed TINY townhouse (think 3 tiny rooms, open living / dining area and tiny kitchen). Tiny garden. They have two children. They bought it several years ago for £200k. Now it’s worth £450k.

But if they wanted to move up to one of those 3 bed semis, Of which there are thousands round here, they’d need 950k+. They might have huge equity relatively in their own property but they’d still need a huge mortgage (for them). They’re teachers and effectively stuck where they are. Which is not a bad place to be because I’d give my right arm for their house but still 🤷🏻‍♀️ It’s a messed up situation.

I think it is REALLY difficult to get on the property ladder in London without huge help. I’ve lived here since 2000 and haven’t managed it yet. My partner and I met just gather the recession in 2008 and it became impossible to save a big enough deposit. We pay a fortune in rent for a 2 bed flat and now - ten years and 3 kids later - we finally might be able to buy a two bed flat for 300k.

Somewhat ironically we have been offered a 450k mortgage but can’t afford that bastard stamp duty. We don’t have an extra 15k lying around! It’s been hard enough saving up the deposit. So no. It really is difficult.

Combination of things here-both high earners plus some good property deals. 6 bedroom plus some land. Home Counties and worth £1.5 million
All likely to change as ready to call it a day on 16 year relationship. Will still be plenty equity to share tho

"In time you will also benefit from the demographic bulge, as there are an awful lot of pensioners living in £1m+++ houses but not enough thirtysomethings able to buy from them."

This is a fascinating question. What will happen then - will prices fall or will it not have much impact on prices? The pensioners' adult dc will inherit the money from the sale of the pensioners' property and probably immediately invest that money straight back into the property market - buying a btl , a second home, upsizing or giving their dc deposits. True, they won't inherit alll the money from the property sale because anything over £1mn is subject to IHT at 40%; and some will already have gone in equity release schemes. But the majority of the money will still be there to spend on property one way or another, so I wonder if it will actually make much difference to prices?

Op, long term residents in those streets will have bought when prices were a much lower multiple of earnings. Are there enough 'new' buyers coming through with high salaries and equity/inheritance/BOMA to maintain the prices - hard to tell at the moment!

Flat in desirable area 1990 ( aged 30) (37,000)
Bought 2 bed cottage 1995 (93,000)
4 bed detached 1997 (£250,000)
Sold 2015 £1.4 million
All in London.

I don’t think it’s that difficult to get on the Property ladder in London if you’re a childless couple in professional jobs

I heard on the radio at the weekend, the average deposit for London FTBs is £160k. £160k. Craaaazzzyyyyyyt

So yeah, if you want an ‘average’ FTB property you only need to get yourself in a couple, nice and early. Both work in the city (no teachers or social workers or nurses please) and each save up £80k. Say, £10k each a year, only take you 8 years.

And in the time don’t even think about splitting up, or having children 😂

"I'm not sure who can afford to buy houses in our street now as people tend to be able to buy their first house at a much older age, so are also older when they build up equity. Unless they afford it through inheritance. It just seems unfair for those whose parents didn't have their own houses to pass to down as they will never catch up, however they do in their careers."

Long quotation, sorry! Yes, I think that will become even more noticeable as more of the long-termers sell or equity release those houses in order to give deposits to their dc or dgc, or their dc/dgc inherit. Funnily enough was chatting on another thread about how that may be the very thing that leads to increases in inheritance/life time gifts tax. If your colleague can afford to buy because dparents can give them a deposit, and you are left renting, that is going to lead to discontent! The amounts involved are so huge. And in time I think that will lead to pressure on political parties to increase tax on lifetime gifts. The 'cascade of inheritance' (John Major) will have unintended consequences (as everything does!)

I agree RedCrab, this is what I would want to trade up too in my area but the costs are so ridiculous, we could never afford it.

www.zoopla.co.uk/for-sale/details/50345771?search_identifier=dd2cff98b64b235a01180d710d0e9f0e

www.rightmove.co.uk/property-for-sale/property-54104100.html

@BlueSkiesLies in my neck of the woods, 2 FTB teachers/social workers etc would quite easily get a 2-bed flat. And it’s a high quality area: leafy, super safe, top schools etc

I recently sold my DF house in a very nice part of West London. He had lived there for 40 plus years. The neighbours were all people who had been there for years and years.

Never saw the need to sell as its a really nice area. They are in houses that are too big for them but who I am to judge that. There were a couple of investment bankers but generally its people who had stayed put.

@fancynancyclancy but why the fixation with the area?

We paid £52k in 1985. Wouldn't be able to afford a room in our house now. Based on nearby sales we guesstimate it's worth £8-900,000 now.

Neighbours bought a few years before us and paid £12k 😮.

I can't imagine how more recent neighbours afford our very ordinary but pleasant street AND the renovations they all seem to do

Yes but what about all the nurses, teachers and carers etc living in London who are providing those desirable state schools everyone craves with staff and care for you and your children when you are sick.
How do any of these people manage on the salaries they are paid? I know people in these positions paying a grand a month of rent. No hope of saving and getting on the property ladder unless they flee London. Then who will teach the children and nurse the sick?

"(no teachers or social workers or nurses please)"

yes, I am sometimes surprised that more people in that position, with transferable job skills, don't leave London /SE and go to live and work where it's more realistic to buy. Obviously they couldn't all do that, as there wouldn't be jobs for all! But I think there are so many reasons why they don't - family, friends, the attraction of London as a place to live, maybe a partner whose job is not so geographically transferable. (And once you have dc, proximity of family may be even more important)

What shocks me are the youngish buyers who come in, pay close to a mill then gut the place before they move in. Most of my contemporaries around here moved in then gradually improved.

@JoJoSM2 yes I think EVERYONE on here is quite aware about how amazing Sutton is JoJo since you don't fail to mention it on every singe property thread!

JoJoSM2 Simply because I was born & raised there same as my DH (although we met at uni) & I hate change, our home is 15mins walk from where I grew up & a 15min drive from where DH grew up. We might have been able to afford if both sets of our parents sold up & downsized & we didn’t have siblings 🤭😄. I wouldn’t trade my siblings for anything & to be honest at some point we will move out of the area, if I had 10 million I might spend 3m on a house but if I had 3m I would rather have lots of cash.