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?

We bought 10 years ago when early/mid thirties and our house was over £600k, now worth over £1.3m (North). No inheritance or gifts from anyone. I’m an accountant in the Big 4 and DH is a software engineer.

I know a lot of people with £3/4/5k a month mortgages.

It definitely makes a difference if you had family who were financially literate who knew about savings and investments

Nobody in my family ever had investments just a regular savings account but nobody really talked about saving
I learned at University. I have two siblings one older and one younger none of them ever save anything they just spend. The only reason my older sister has a retirement is because she has a pension

I always lived within my means and saved what I could - it's just common sense to me. My sons are the same, so maybe its genetic.

Having a stable partnership is helpful. My DH and I bought a 2-bed flat in our late twenties, a 2 bed terrace in our early thirties, extended it into the loft to create a 4-bed terrace in our mid-thirties, traded up for a 4-bed semi-detached in our mid-fourties, and finally paid off our mortgage with (sadly) an inheritance in our early fifties. Before and since then, we have saved for deposits for our own two sons. Our eldest (22) started his first graduate job last year and is just about to buy his first flat in London.

When both boys have their own place, we will downsize, retire, travel and enjoy ourselves.

We have also paid into private pensions all our working lives and, since paying off the mortgage, have made additional voluntary contributions to top them up and save tax.

Was always taught to save. DH and I bought out first property at 24. Mortgage was the same price as rent.

@bluntscissors also worth mentioning that we knew a lot of other families who got interest-only mortgages, meaning they could afford bigger homes..They were banking on house price rises so they could later downsize to help pay off their loans. I'm too risk averse for that strategy, but it seemed that a lot of mortgage brokers persuaded people it was a good idea.

Salaries in London for dual income professional couple is likely to be £150k p.a (perhaps more as often a bonus). That's a net salary of circa 9k per month. Even if rent is 2k per month there is room to save for a few years.

Accountants, software engineers, data analysts, engineers would get earning this by late 20s.

Well paying careers.

Same here but I don’t regret my 20s. I wanted freedom and flexibility and to pursue a low paying creative career so that’s what I did. I wasn’t in a long term relationship and I’m very glad I didn’t buy property with anyone I dated in my 20s! I lived the life I wanted at the time and it didn’t occur to me not to indulge my whims and fancies and live what I would’ve considered a very boring life just for financial stability. I grew up poor and assumed I’d stay poor so I thought I might as well be poor and enjoy myself. As it happened I did then get a job paying enough to buy a tiny flat in my 30s. But I don’t find it depressing. I love how cheap it is and even though I could afford to upsize I’ve chosen not to.

My parents never taught me explicitly although I know they did save (not as large amounts as we managed as they were on a lower income). It's something I always did from getting pockey money and my first Saturday job, and seemed obvious to me - if you want something big that costs a lot, and you only get a small fraction of that amount every week, then you have to put aside money that adds up, to be able to pay for that big thing. It's just maths. Although my parents never invested in equities, and that was the thing that made a major difference for us. The returns we had on those were more than triple the amount we saved from salary.

Me and DH bought our first home (ex council flat on a dodgy estate) when we were 22/23 years old.

Now approaching 40 and live in 550k house in the south east.

Never had any family help at all. I lived at home, sharing a bunk bed with my sister and desperately wanted to move out. I got a job straight out of uni and saved like mad, DH the same.

I know it's not the life everyone would choose but it's working out well for us!

Prioritised buying a house at 24, in 2008/9 crash and like people say built equity. Bought do-er-ups and moved every 4 years, making £300k profit on each all in an area that wasn’t desirable of popular at all 20 years ago but now people go wild for. House is more the 600k

DH and I bought a tiny dump of a flat in a rough part of east London in our 20s with a £30k deposit we’d saved up from our salaries whilst living in shared houses. Did it up ourselves to save on labour and bought everything on eBay. Partly our doing it up but also the massively rising market in our area meant we made £230k when we sold it. Bought a run down house in south east London for £600k 8 years ago. Is now worth £1m. Not moving again and instead aggressively paying down our mortgage. Hope to be mortgage free by 50.

Inheritance or well paid jobs.

We didn’t inherit but we bought a 1m flat (north London) on two decent but unremarkable London jobs. Combined income was about 300k and we saved a 20% deposit.

Time and hard work, no frittering ££ on stuff they don't need.
My nephew and wife both worked hard in entry level jobs, got promoted / moved to better paid, but basically worked hard with overtime from age 16 (no fancy degrees so no student loans) lived at home and saved loads for a deposit, bought a flat that was internally in poor state (old people previously owned), modernised and did it up nicely (he's a tradesman, she's an ace interior designer/decorator so can do a lot of the work between then), sold that bought a bigger one again it had been owned by old people, did that up, bought a 2 bed house and renovated that, I think they're now on their 4th or 5th property and that they've done up really nicely and are about to sell and buy a £450k detached house, they don't have a massive mortgage as they've really built up equity so get a low rate, they've their own investments that they've paid into and bring dividends, and can spend on doing up. but this house they're buying has scope for a good size extension - they'll do most of the work themselves but by the time its done it'll be a 600k house. They're mid 30s. No inheritance yet.

It’s obvious isn’t it? Don’t think anyone ever taught me I just knew

Was gifted a modest deposit by my late mother and used the help to buy scheme to get a flat in an up and coming area of London and overpayed on my mortgage whilst interest rates were low. Met a partner who was a high earner and also owned a flat in London (no inheritance). We sold both flats before flats started to fall and the equity we have amassed was £300000 deposit. We got a 5 year fixed mortgage a few months before Truss debacle. That's how we managed it without hundreds of thousands in inheritance. Basically we bought and sold flats on the London market at the right time.

There’s been a lot of attention in the media/public consciousness over the last 10-20 years about how hard it is to get on the housing ladder so we absorbed the message that we would need to save for a deposit. Similar to the discourse about the state pension being unlikely to exist by the time we retire so we’ve been saving into pensions from the beginning. We still had plenty of fun though, exotic holidays, hobbies, concerts, nice wedding etc.

Re your point about having a big mortgage (our outstanding mortgage is about £460k) - we could survive on my salary if we needed to but only for the essentials. We couldn’t survive just on DH’s salary but my skills are sufficiently in demand that I’m unlikely to lose my job and if I did, the redundancy payment would get us through. We also have various types of insurance - income protection, critical illness, accidental death, etc in case of loss of income that way.

Yeah, I mean they might have been saving all those years. But I don't really think they'd have been able to save that much. Lots of going out, drinking, eating, new clothes and fancy holidays etc.

If we had a household income of 120k, I personally wouldn't take on a £480k mortgage. That's too much per month.

It's my assumption that they don't have massive mortgages as lifestyle has not changed.

I do think it the case of most of my friends they have been gifted 100s of thousands of pounds.

I appreciate some people on this thread have managed to save 100s or climbed the property ladder, but I do think that is rare.

Rich parents. I don’t know anyone under 40 that’s bought a house in the south east without substantial help from parents

It is possible for a couple earning min of £100k joint to get 6 times income mortgage. Usually taken over a 40yr term. So that and a decent deposit would get them that sort of house

40 year term? Then you'd have to be earning that by the age of 25. I don't know anyone that was earning that much then and had a decent deposit? Sorry but that is not realistic.

To max out a LISA you only need to save ~£300 a month each. So as a couple would only take 6 years to get a 10% deposit on a £600k house.

You sound very risk averse, but taking financial risk is the only real way to become wealthy.

You can get a 40 year term when you're 30, we're mortgaged until DH is 70. £50k each is barely above average in the South East, below average in London - perfectly realistic.

They don't necessarily need to be "rich" parents, just parents who are downsizing or bequeathing.

I was able to pay off our own mortgage earlier than expected because my (not rich, but home-owning) parents both had both sadly died by the time I reached 50. As we no longer have a mortgage, we can more easily help our own son get on the property ladder. Once he is on the property ladder, he will have the stability needed to start his own family if/when he wants to. Giving the DCs a hand-up with nest building helps to make sure the family genes get passed on. Stable, financially secure (not rich) families help to create more stable, financially secure families.