£450,000 for a tiny 2 bed in Brixton

[TheBogQueen]

I left London 10 years.

Holy moly I cannot believe the prices in 'trendy' and 'up and coming Croydon

Croydon???? (Yes I'm watching location)

A couple I know (mid twenties, like me) have just purchased a flat in Dalston.

Assume their parents have helped them out.

Crazy crazy money. My sister's 2 bed flat in Shadwell is now worth £400,000. No way is it actually 'worth' that.

We've just bought a four bed detached house, 15 mins drive from Manchester City centre for £270,000.

Part of me is jealous of all that London offers, part of me thinks thank god I don't live there. £400,000 up here would get you a nice house in a very good area here. We settled for the nice enough house in the ok and convenient area.

Not everyone wants or needs a kitchen??!! What do these people do, survive on tap water and excitement??
I TOTALLY get what you mean, younger people (or just people in general) might not be arsed about having a 5 bed in 'the middle of nowhere' as you put it (alternatively, in a suburb or town), BUT I am genuinely baffled as to just who all these young fun city dwellers are that buy these half-million pound one bed flats, where in earth do they get the money? If they're say, under thirty ish with no kids, how are they on such high salaries to afford a deposit and mortgage? What do they do??!! Its crazy. And when they have got a bit older and decided they want a family, what do they do? Stay put, move out of London, or what? Its just that round here, most 25 year olds with a degree are on about £25,000 a year, obviously with a view to increase, they aren't buying £500,000 houses

DH and I bought a 2 bed flat for over half a million a few years ago (zone 1). He was on a six figure salary before he was 30, and built up savings from earnings, investments and not being especially materialistic. No inheritance or parental help (except supporting him through university). (My own salary is very ordinary and I haven't contributed nearly as much to the mortgage). He works in IT, so there isn't the same pressure to keep up appearances as there would be if he worked in the City etc. Our location means he has a 20 min commute and his hours are fairly normal anyway, not the long working weeks you get with City jobs. His colleagues are on similar salaries and it's the norm in their circles to buy a small, fairly central flat for these prices. I have family members and friends who have done the same.

As for what happens when we want a family - we have decided that we will either stay child-free or perhaps just have one, but remain in our 2 bed. We like our city centre lifestyle and feel that the city offers a lot for children (I grew up here). Lots of friends have remained child-free and are in their 40s now so likely to stay that way, enjoying lots of hobbies/travel and a busy social life, and it's a big assumption to think that the buyers will eventually end up with kids in suburbia.

knitted thanks, I was genuinely just curious as to what the general 'done thing' is. I'm assuming most people buying these properties must be like your DH then, because six figures under 30 is quite unusual but I suppose if you have to live in London to earn that sort of money, you're going to buy somewhere that's convenient to your life.

Do you think people on lesser salaries rent more often than not?? Do a lot of properties get bought by developers?

Yes London house prices are insane. We live in a two bed maisonette, moved in 8yrs ago for 350k but now worth 650k, we very well know we could get a 'mahoosive' pad for this elsewhere . However we don't live in London for the square footage, we live here because we f**cking love London....one of the most incredible cities in the world. I would far rather have one or two less rooms than live somewhere mediocre

Just on the who buys these flats.... I think it is mostly parents shifting equity out of their London family homes for their kids. I sold my two bedroom Central London flat a few years ago - the three serious offers were from a medical student whose dad was going to pay cash, a girl whose grandmother was giving her a deposit and a young married couple whose parents had each given them money. None of them were over thirty, and I am fairly sure that they weren't high earners

Its just that round here, most 25 year olds with a degree are on about £25,000 a year, obviously with a view to increase, they aren't buying £500,000 houses

But this is the catch 22 isn't it. The people in London that we are talking about earn much more than that because they have to to make it worthwhile taking a job in London. The problem is that because everyone is earning more the house prices go up accordingly. So in reality people aren't actually earning that much more after the cost of accommodation is taken into account.

Mumble I'm genuinely curious, what is it that London offers that other cities in the uk don't?

I was coming on to say what Dieu said a while ago, I'm in Edinburgh and we are struggling with a very large budget to find what we want (3+ beds, family home with access on to a garden, areas we like - which are by no means the poshest parts of town btw). Prices are rising constantly here, with good properties selling within a few weeks and for way over the valuation.

Re salaries - we are under 30, DH earns six figures. I earn about a third of what he does but it is rising. Our biggest challenge has been saving a deposit starting from nothing, and at that level of purchase we need a lot for Stamp Duty as well. We have no family money, inheritance etc.

London is eye watering and when I get a bit upset that we can't find a home we like, watching Location does cheer me up a bit!

DH earns six figures. I earn about a third of what he does but it is rising. Our biggest challenge has been saving a deposit

Really? You are struggling to save on salary like that?
Are you one of the 'majority' (according to others on the thread) who have no need of a kitchen so eat out for every meal?

A deposit on a 750k house would be 150k ish yes?

I can easily see how that's impossible to save on any salary!

Saving the deposit is the hardest thing for most people. My older daughter saved a lot of money over 4 years in her first job. She is like I am - happy even to wear second hand clothes, not go out etc. Little miss frugality, grandchild of 4 WWII brought up under rationing.

She worked very hard, often 12 hour days and lots of all nighters so that also means you don't spend because you're working. It paid off because she bought at end of last year her 2 bed flat with her husband in London. They both earn a lot for their age. I have also helped towards the deposit for each daughter and their father gave one £10k which went 100% on stamp duty which is such an unfair London tax on tiny one beds which would not be subject to stamp duty anywhere else. So hard to save for the deposit if you need tens of thousands to pay stamp duty on tiny 1 and 2 beds in London. Very unfair and a tax on job mobility. So they had a bit of parental help but also did a load of saving and picked high paid careers and worked hard at university etc which not all students do. The main reason they could buy is they picked a high paid career (law) rather than say media or teaching. It was not the deposit but their salary levels and therefore what multiple of what you can borrow.

On why do people want to live in or near London, I live here (outer London) because it has all I want -a peaceful private road, large garden, lots of parking, wood opposite the house but on the tube and into London and near air ports quickly. It suits me. Everyone makes different choices.
Also career - there is more money here. The law firms (very few) where partners make £1m to £2m a year are mostly in London. There is a massive gulf so if women are after that type of prize rather than it being something they would hate then they work here. Also don't forget commuting. You can live further out and commute in a few days a week in some jobs. I had a friend who lived on a Scottish loch in a huge family home/estate and he flies to London every Monday and returns at the end of the week. That can be a rather nice split life if you don't mind a bit of a commute ( no children yet which makes it easier).

I agree with Dieu much further up thread. We live in London in a terraced house with garden worth over half a million. It's gone up by nearly 300k since we bought it in 2008. DD is in an OFSTED Outstanding school she loves, which helps.

We know we could buy a much larger detached outside London but for us it's all about location: we love our house and we love London; we make the most of living in the city and go to the big parks, museums, galleries and restaurants most weekends (stay local the other times). We do earn well though but London can be enjoyed on the cheap as free museums and galleries plus loads of cheap but good restaurants, food can be cheap especially if bought locally.

Yes, we have saved about £70k from our salaries so far but we need more for a 10% deposit and stamp duty at the level we want to buy at. We also need to keep some money for IVF, house renovations, furniture etc.

Maybe 'struggling' is not the right word, but it certainly takes a long time and in a rising market, living in a scruffy, expensive rental with damp and intermittent hot water, it feels like a struggle at times!

We are both frugal Scots - we take home-made snacks with us everywhere so we never have to buy food. Our dining table is my parents' old plastic garden table with a hole in the middle of it, so I guess it's not true to say we've had no family help with savings

Plus, in order to secure a popular house at a closing date you need 10% deposit for mortgage! stamp duty at 4% plus around 10% over the home report valuation so you can bid realistically.

The two houses we've bid on so far we've offered the valuation and been outbid by £80k...

I particularly object to stamp duty. If I just wanted to swap this house to another I just would not do it because of the huge stamp duty. we now have some of the highest taxes in Europe even before the introduction of annual wealth taxes on the value of homes over £500k or £2m or whatever it is set at which may well come in unless people vote Conservative (in England).

Also it's harder to do now what we did - which was move every few years as our salaries rose from a small terraced (they still cost only £300k in this bit of outer London by the way) to a semi, to a small detached, to a large detached. If you did those 4 moves now you'd be handing the state a small fortune (in London) in stamp duty. It used to be either nothing or 1%.

I was born and brought up in South London. In my twenties and early thirties, I would never in a million years have considered living outside London. If you want to go out, everything is there on your doorstep. You can go into the West End and come back by night bus at 3am. If you don't fancy cooking, you just walk down your high street and you have every cuisine under the sun. Nothing to do at the weekend? Book a cheap West End theatre ticket and just pop up on the train. Now I have children, the expense and the overcrowding has made it completely not worth the expense for me. I hardly ever take the kids into London town to the museums because of the hassle. I go out of London so I can park. We hardly ever go out to restaurants or the theatre as we have to book babysitters. We don't have London jobs or salaries, so it's just a struggle for no discernable benefit. It depends on your priorities at different stages of your life. Friends who have moved out come back as tourists now and really make the most of what really is a wonderful city to visit, but not for us to live in anymore.

I don't object to the existence of stamp duty necessarily, but I do think it is DONE WRONG.

Jumping to a higher percentage on the whole amount just makes for silly pricing. Make it like income tax where you pay the higher rate on the amount above the threshold only.

Don't be a member of a gym - scrub the floors and windows instead.

Or flagellate yourself - burns loads of calories and you'll get lovely toned arms too.

I'm watching the episode that prompted the OP.

In answer to the question how do they afford it...

The couple with the 500k, she inherited what sounds like a big chunk when her dad died when she was 17

And the one with a 280k budget has been given a deposit from her parents

Yes gingee most people I know on salaries like mine are renting here, some in late 30s/40s. I do have friends though who are on average salaries and have managed to buy in London though - some a few years before us when it was a bit cheaper, some had deposits from parents, some who used schemes like Help to Buy, shared ownership or Right to Buy. Lots of friends are scattered across London now, having moved further out to buy where they can afford (a family member who works in a shop (non-managerial so quite a low salary) has just bought their first flat on their own in SE London so there are some affordable bits left).

Re. Stamp duty - yep it's daft and unfair and I've always wondered - how big is the rubber stamp they use if you're paying 3%?! I hope it's f*ing HUGE!!

Most of our friends (mid-30s) own in London now - mostly, parents have helped with deposits or inheritances, but some of my friends have saved up by themselves. Usually, the friends who have saved up their own deposits end up buying ex-council houses. It seems to take people about 10 years to save up enough for that and that's people on fairly high salaries (between 40 and 100K).

Yes, it is possible to do it faster if you stay in every night eating baked beans and scrubbing your floor but I don't think it's unreasonable to want to have some fun in your 20s as well!

It's a difficult choice. We had the baked beans or their equivalent as I worked full time, no maternity leave, married at 21, baby when I was nearly 23, both worked full time. Very very hard 20s. Most lawyers my age had babies nearly 15 or more years later but I don't regret it nor buying property early on.

Yes the 3% stamp duty my poor daughter and her husband had to pay on their small two bed is grotesque and basically a tax on job mobility and on people in the South East. The state just gets bigger and bigger and takes more and more taxes and they never cut tax, or hardly ever, national insurance increases too and now more and more people are getting caught by the "higher rate" 40% band, particularly Londoners and more and more are paying inheritance tax. There seems to be no low tax party in the UK to vote for.

The 95% loans of help to buy have helped some people and my other daughter could get a buy to let loan (but not afford to live in her own place and lives at home at the moment and used to live in her friend's place) but at least she's bought and that I suppose is because I've always worked full time. Not all women keep up careers so therefore cannot help with deposits later. Mind you in my day finding that deposit was dreadfully hard too and interest rates were a lot higher.

Don't get me started on getting the deposit. We have worked hard to get together what we have so far (not an insubstantial amount), but need way more as interest rates are set to rise.