How are people affording to buy in London?

[absolutelyeverybody]

Looking on Rightmove at pretty standard terraced houses in ok but not super posh areas like Clapham, Fulham, Wandsworth - houses are £2m!

Who is buying these?!

Is it simply a case of family money/help??

And further in to zone 3, houses are £1m!! How are people affording this's?

Obviously some people are incredibly well paid.

But most young people who buy their first starter home in London (usually a flat at around 400-500k) have family gifting them a huge deposit.

Mainly higher earners, or have gotten on the housing ladder earlier so have built up equity. Some family help too I’m sure.

Tbf if 2x adults are on £100k each they can afford the £1m. Yes £100k is a lot but in London it’s not crazy money.

Many people buying million pound plus houses will have significant equity from previous homes. You will have heard of the housing ladder, these are not the bottom rungs.

Or people have inheritances, because their parents bought these homes for what looks like a pittance in today's terms, and they're spending that.

Only a small minority of people will be buying these homes with a high LTV mortgage supported by income and a small percentage deposit (which will still be a substantial six figure sum) alone.

Yeah this.

We’re in our 20’s and have 2 couple friends who moved to London for work and they both are high earners (you have to be to live in London really), and both started off in flats which they luckily and mainly due to timing ended up making a profit on when they sold.

I often think this. I think about the people earning the kind of money to buy a £2m house and then just can’t picture them living in that sort of house.

I'm not sure how someone classifies Fulham as "not posh." Similarly, many parts of Wandsworth are incredibly posh and affluent. The neighbourhood "between the commons" is widely regarded as one of the most desirable places to live in South London if you have a young family. It's eye wateringly expensive for sure, but these are not "ok but not super posh" parts of London- they are top choices.

Clapham, Fulham and Wandsworth are “posh”, or more accurately incredibly gentrified. Normal people haven’t been able to afford those places for ages. They’re also not buying terraced houses especially as first homes, they’re buying one or two bed flats. I bought as a single person with no help in SE London zone 4 and it was a 200k one bed flat. I wholeheartedly agree London property prices are insane and something needs to change, but often when people say they can’t afford to buy in London what they mean is they can’t afford a 3 bed house in an upmarket area of zone 2 and won’t lower their expectations.

Yes gifted deposits. It's part of the reason the middle classes are getting poorer!

Although the bigger reason is that fact the super rich are hoarding wealth by not paying tax, using their compound interest to buy up more assets like housing stock and squeezing prices up, meanwhile there is less money in the economy so prices go up, wages stay depressed...and eventually we slide downwards in living standards.

Sorry bit of a rant but we are going to have to address it at some point, if enough of the electorate want to tax mega wealth then surely we can do it...we did Brexit after all 😅

The people I know with a 1.5 mill London house had family money to get them on the ladder 30 years ago and have decent careers, though not stellar, in well paying professional London jobs. They are also expecting sizable inheritances.

Not everywhere in London has £2m houses. As long as you can make compromises like living further out or not having a tube station nearby (plus a long complex list of other factors) you can get a house for £700-800k.

I live in a little flat in Zone 3, currently on the market for £300-325k, and a woman came to visit yesterday who was relying on the Bank of Mum & Dad to purchase a property. I think this is very common now.

I earn well but having gone through a divorce & DD going to university this autumn I can't afford to stay, and am moving away.

I used to live in London and still work in the city, but prefer village life these days. Do you live in London yourself?

To be honest, areas like Fulham have always been expensive, so the current prices aren’t exactly a shock. It’s never really been a first-time buyer’s market, and realistically, getting on the ladder in Zones 1–3 just isn’t feasible for most people. These days, Zone 4 and beyond is where it starts for many.

Most people who can afford to buy in those central areas early on either have significant equity built up in their current homes or are receiving gifted deposits from family.

Lived here in London all my life (50 years) and nobody I know from primary or secondary school has been able to buy in London without an inheritance or large sums from family towards deposits.

The average salary in London is around 50k, although it varies by area. Wandswirth is a high income average. Where I live (zone 1) it's 24k.

I used to live in Wandsworth, we were renting a terraced house (we are not from the UK and no longer live there) but when I was doing NCT, couples in their early 30s were living in £1.5m+ homes. I never asked how they afforded it.

Our house was worth around £2m but like I said we rented, never would have been able to afford to buy it.

Our neighbours both had babies/young children also. I think one was the husband was much older and had a bit of money, but the other side, the wife didn't work and the husband had some sort of creative design job. Must have been family money.

There were streets and streets and streets of £1.5-2m+ homes with young families, not people who've been living there for decades. They can't all just "have good jobs" surely?!

I wouldn't say Wandsworth was posh. I think Chelsea and Belgravia are posh.

in the case of London families who haven’t divorced, they downsize when children in 20s and release equity to give their children money to buy a flat to get them started.

The answer @absolutelyeverybody is most people have family money ( not everyone, obviously).

@absolutelyeverybody

I get what you meant about Wandsworth, I lived not too far from there myself. But with those areas is also how close to central London they are, how close to the city, or Canary Wharf etc. That also dictates the prices. Some parts of Wandsworth are nice, large homes, great communication links etc. Belgravia and Chelsea are just a whole next level of wealth and "posh'nes"😬

I think when people are clever with their money, dont have debt, are aware of best ways of saving, maybe investments as well, don't waste it on some random BS, don't eat out all the time etc. They can afford live on one very good salary. I just think that to get on a property ladder in the areas we are discussing here many will get help from family - and that's fine. My parents would helped me as well if they could :)
I know people who purchased absolute dumps, lived in the house while renovating and also made good profit on it giving them just this extra push needed to get bigger and better house further down the line. It's really a combination on things

2 professionals, each bought a flat 10 years ago with deposit from the bank of mum + dad, have built up equity + make a profit (sometimes 100%) when they sell, now on six-figure salaries, £1.5m is perfectly doable. Plus massive bonuses in some industries, maybe an inheritance here or there.

Nowadays the areas are posh because they are a good mix of being in London but living like surburbia. SW London is very desireable.

We earn combined a lot and live in zone 5, affordable with a child and not stretching ourselves to the max.

We met a couple during our NCT course who lived in the ME and Singapore for several years, earning lots and didn't spend so they managed to afford a huge house (def £1M+) when they started family.
Others get inheritance, bank of mum and dad, are lucky with employment or - like you - actually rent and not bought the house.

Inheritance in the main I think. Not mega rich people passing wealth down but as a pp said, from parents who bought decades ago for a relative song.

I sold a Zone 3 house for £60,000 in 1985 - according to Rightmove it sold for £1.1 million last year. If I'd stayed there and died today my sons would have a tidy sum coming to them.

Yes, combining equity from price growth of two flats or a few years working abroad and saving is another way to accumulate a lot more wealth than the average person.

Oligarchs from former Soviet countries have bought some of them.

Family wealth and a slim number of very high earners I expect? If I earned enough to buy one I’d not bother at that price and purchase something much bigger and commute.

Those areas have long been extremely expensive so I think you’re in La-la-land if you think ordinary people on average salaries have bought there for a long time.

When we were first married DH and I lived in an ex-council flat in Clapham. Terraced houses in the same road were £1m then, 20 years ago (which was unaffordable, so we moved away)

£100k is kind of crazy money for most people who live outside London. And £200k if combined is extremely crazy. Agreed that London is expensive but the opportunities, cultural, employment, educational far outweigh the cost of living there. Would you want to live in Grimsby or Rochdale ? That’s the price you have to pay.
I just think it’s sad that that most ordinary young people would never dream of moving to London, especially for uni, because of the exorbitant cost of living. Some really bright ambitious kids up here will never get the opportunity to experience London, on the other hand if you’re the child of a Russian oligarch or Chinese millionaire, worlds your oyster in London. Ironic that it’s our actual capital city !