How do people in their late 30s afford £600k+ homes in the South East?

[bluntscissors]

So many people I know with jobs worse than mine have houses worth £600k+

We are in the South East so £600k+ isn’t actually a super fancy house. Of course no one talks about their finances and it would be crude to ask.

I am almost certain if you have a house worth this much then you must have had at least £300k in cash for a deposit otherwise the mortgage would be too much.

My group of friends is only late 30s/early 40s so haven’t had decades to build up equity.

Is my hunch right that they all must have been gifted 100s of grand from their parents? This seems absolutely wild but I can’t imagine another route.

If you have a house that is 600k+ tell me honestly how you managed it?

It's really not that difficult to take that amount off.

I understand how overpayments work.

How can anyone bank on an inheritance though? particularly with all the changes to pensions and potential property taxes plus the cost of care?

My parents & in-laws estates are worth 3 mill plus & we had help on the ladder & with renovations. We get money etc for help with holidays annually but I just wouldn’t bank on inheritance.

It isn't that the mortgage reduces. We overpay and our incomes have risen.
Most people in their 30s haven't hit their peak earnings yet, so although most aren't buying £600k houses the same logic still applies.

This is very true. I'd also say that lots of first time buyers now seem to want the perfect house and are waiting to buy it but the market is running away from them whilst they're waiting.

DH and I bought our first home in our mid 20s. It needed work and wasn't in a desirable area, in fact it was in an area that I had initially said I definitely didn't want to live. But it ended up being a good decision, it got us on the ladder and we did it up and made money on it. We moved after a few years by which time we had some equity built up and had added value. We took a mortgage out over a long term and then overpaid when we got pay rises so now I'm 38 the mortgage is due to be paid off when I'm 60.

I get that lots of first time buyers don't want to take 40 year mortgages, or spend lots of money on a poky flat, or don't want to do work to the house as well as working full time but the people that do get a foot on the ladder, get paying off some equity earlier and meanwhile renters are facing increasing costs on their rent and the gap widens.

@IsItOverYetPleaseI never said it was difficult just that it is not the norm.

Lots of us overpay without expecting any inheritance!

@IsItOverYetPleaseI was replying to a post that specifically mentioned getting an inheritance. Why would you infer that to mean I think people can’t overpay without one?!

Because that post mentioned a range of factors that would mean salary increases and you replied only focusing on inheritance.

This is getting silly now!

It makes complete sense to buy a property and avoid renting but I think the market is now very different. We started with a flat which worked for us, that is harder today so it does often make sense to skip a stage because stamp duty costs can be £££ & property isn’t necessarily keeping pace with inflation anymore. But I also think you have to be mindful of other costs eg utilities & taxes are only ever going one way. Obviously it depends on life stage, if you want dc, how you want to educate them, set them up, if you want to work p/t, when you want to retire etc.

Yes, me saying I think it’s unwise to rely on inheritance must mean I can’t imagine there are other ways of overpaying. So silly!

I agree. The market is now completely different to how it was even a few years ago. Building equity is very difficult where prices are stagnant or falling. The days of buying a house and riding the escalator of never ending price increases have gone. Those of us who benefited from that period were very lucky. I don’t think those market conditions will return.

out of a population of nearly 10 million in London, so not 'a lot' comparatively. (I haven't checked that stat – elsewhere I saw 10% floated as a percentage of Londoners)

I’m 55 but we bought our house in SE London 21 years ago for £235,000. It’s not approx £650,000. We used £50,000 equity as a deposit from my flat I had bought. I bought a flat with £11,000 deposit and within two years house prices shot up turning my £11,000 into £50,000. I’d never be able to afford my house now if I was starting out.

Sure, half a million isn’t a lot of people 🤷🏼‍♂️ 😆

It's 5% of the population of London. So not, statistically, not a lot.

1. In my late 20s bought flat with sibling in 2004, loaned deposit by generous elder family relative which we paid back over 5 years
2. Met DP in 2008 who had also bought a flat with his sibling
3. DP and I rented together while siblings rented out spare rooms so mortgage was mostly covered - I paid monthly contribution to my sibling towards upkeep
4. DP sells his flat in 2014 and walks away with £50k which gives us the deposit we need to buy a house in need of cosmetic work outer London for £350k , not our first choice of area and meant moving away from friends, but it was a ‘now or never’ situation as we knew we would get priced out of London completely if we waited any longer. In our late 30s/early 40s at this point with two young DC - it was the right decision… although still jealous of friends who had managed to buy a couple of years before the big increase in house prices and got to stay in the area (their houses now worth in excess of £1m)
5. Sold flat with sibling c. 2018 so they could buy a house, used my proceeds to fund loft conversion
6. 2026 - currently the is house worth c.£600k, mortgage around £250k, remortgaged several times to fund renovations on house… so in reality no real profit given the amount we’ve spent on it but heigh-ho, plan to be mortgage free by retirement.

So really a combo of loans, savings and good profits from sale of our properties. We are very thankful every day for our home when we see how even more challenging it has become. We might receive inheritances before retirement, but work on the assumption that we won’t if care home situation comes into play and are not planning ahead assuming we will… we would rather have GPs with us as long as possible 🥰

@BermudaRhombusagree.

The amount of arguing over what that means is ludicrous!! (I'm agreeing with you btw!)

The question was whether a lot of people in London earn over £100k and the answer is that half a million people do. I think most people would say that is ‘a lot’ and the proportion to the total population is not really relevant. But we can disagree and everyone else can form their own view!

Of course the proportion to the total population is relevant, otherwise you have no idea of what that segment of earners means in context. The amount of people is also relevant to the amount of houses and house prices – if only 5% of earners can on paper afford, say, 50% of the houses for sale in London, that tells a different story to if a town of 600,000 people had 500,000 £100k+ earners. There's a reason statistics aren't presented in isolation.

I guess because many people with large estates start planning for inheritance tax. They don't wait until they need care or have died.

Our house is about that, it was worth quite a bit less when we bought it and we had inheritance plus a mortgage and some equity from our previous house as that had gone up in value and we’d paid off some of the mortgage we’d taken out on that.

Ours was 850,000, I’m a sahm and husband is in finance. We bought a house for 400,000 then needed more room so found this which we love. We’d built up a bit of equity so at 38. Our mortgage is high but fine and we’re really happy!

This is getting silly now. Its a thread about buying expensive houses, not a statistical analysis of London salaries.
Earning £100k+ is one way people do it, and half a million people is objectively a large number.

This.