To not understand the wealth in London?

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Posting this for traffic. I genuinely don’t understand how “normal people” in London are so wealthy. I went to university with some people who now at age 40 live in multi million pound houses. Send their children to £40k a year schools, and have amazing holidays, skiing, etc.

Lots of them became lawyers or consultants, I don’t understand how they seem to have so much dosh.

There are streets and streets and streets with houses and families like this.

This thread is pretty boggling for someone like me who lives in a city in the north which is considered quite affluent - it made the local news when we got our first £1m house on the market! We have just sold our 3 bed semi in a nice but not naice area for £305k which we are ecstatic about as we paid £210k 6 years ago.

Prices doubling, quadrupling etc, it's just madness. Goodness knows how anyone gets on the property ladder these days.

I know what the op is saying - if you're in it all the time it probably feels normal to you but whenever I go to London or many other parts of the SE I am struck by how much more money there is sloshing around - more new buildings, higher end shops etc. Don't get me wrong there's plenty of seriously wealthy people in the north too, but it's the concentration of it in London which is marked. But it's the capital, there's significantly more people there in general anyway - so almost certainly more poverty as well. It's where most businesses have their base, so it's why there is more investment there.

London has just more and bigger of everything I guess.

What does flipping a house mean?
I thought it was when MP's or other second home owners cheat the tax collector by saying they live in a different house to the one they mainly use.

It's when you buy a house cheaply, spend some money doing it up and put it back on the market for a lot more, thus making a profit. Remember those Sarah Berny programmes? Some of them spent so much doing them up they only made £10k profit and that was because of the insane market at the time.

Lots of them became lawyers or consultants, I don’t understand how they seem to have so much dosh.

You have answered your own question right there. It's really not hard to understand.

What I "genuinely don't understand" is why you'd namechange or join to post this.

I don't think 'normal' people in London are* wealthy.

Your OP is bizarre, confused and so hazy in its premises and the question it asks (what, actually, are you asking?), I suspect you're being a bit goads.

You could move to London with help from DPs in early 2000s, Then get another mortgage on the strength of the money that had accumulated in your first property over a year or two, as the prices rose, then move to new property and let old one at a high profit, covering the mortgage ++, then do that over, and over. Money for being in the right place at the right time and no effort.
Once the prices rose the salaries rose too to match. Win Win.

If you are specifically talking people aged around 40 and up, that cohort had the opportunity to make a lot of money on the London housing market (assuming they earned well out of university) before the 2008 crash.

I’m a few years younger and my first house (which we did around £35k of renovations to) sold for the same amount we bought it at - seven years later (we bought in 2007).

Timing is everything. People younger than me have it much harder and may not be able to buy at all.

I think that about where I live OP and it's nothing like London. How do so many people have such high paying jobs! I just can't fathom how people cope in London. My friend moved there a while ago and with what they earn and the outgoings they have I don't know how they survive.

Getting on the property market young, in the right area (yet to gentrify) and making repeated house moves (with profit every time) is one of the contributing factors but a well paid professional job (most likely in the City) and inherited wealth will also be factors.

Agree though about the areas where there is just super expensive housing stock for roads and roads. Many parts of NW and SW London are like that (and that's not even considering areas like Knightsbridge, Kensington, Notting Hill, Hampstead etc...). Kingston is an eye-opener too - Coombe Lane homes must be in the £2million + bracket and so many private side roads off it with multiples of homes of equivalent if not higher (because they're not on a main road) value.

What @nowahousewife said. It's really impossible for younger people to get that same standard of living now - my brother and his gf must be on about 250k between them and they've just bought a terrace in Greenwich! No investment properties etc for them to build the wealth, it doesn't work like that anymore even though by anyone's standards they're earning a shed load of money. They have a nice lifestyle but student loans, huge mortgage etc to fund from their salaries. People starting off in London now have little to no chance of ever achieving the kind of wealth the baby boomers have amassed, so let them eat their avocados I say!

If the OP question is about the generic wealth and opulence that appears prevalent in some parts of London town in the form of luxury new builds and luxury goods boutiques, that's a slightly different ballgame - inbound foreign investment from nouveau riche (not meant in a derogatory way, simply stating it's not inherited British aristocratic wealth). There are entire property developments marketed abroad only. Some property developers (and ancillary services) have made a ton of money from this in London.

See also 'unexplained wealth order'.

We probably fit into that catogory but we are late 30’s and it’s been luck for the most part.
My OH is very high up in finance and earns a lot of money, but it’s taken since leaving uni to work his way up to this point. Also we made some clever decisions with buying and selling property at the right time and I also had money I inherited from a family member passing which enabled us to buy a house in Central London and then double the price selling it a few years later. My kids will go to private school but we have put money aside over the years for the fees and we were lucky enough to pay off our mortgage a few rats ago by being clever with investments. We still have another flat in central London we rent out. We have lovely holidays etc but on the flip side we work incredibly hard and long hours and so the pay off is those holidays etc because the rest of the time focuses on work and the stresses that come wth it. We don’t live a conventional 9-5 it’s more like 6-9 as a daily work pattern.

London is the only city in tne UK that makes a net contribution to the country’s wealth. It has a high concentration of very highly skilled and very highly paid people generating that wealth (for the time being.....) .

Plus the property factors.

It would be better if the sectors that made this money were more spread out round the UK but the individuals running the big corporate and financial institutions would still be as wealthy wherever they lived.

There is also huge and widespread poverty and disadvantage in London, and people making do in a modest, thrifty kind of way on average salaries and in much smaller houses than we would have if we lived elsewhere (me).

Are all the slightly dim people posting on mn this morning?

Yes not understanding what this is an oddity/ hard to explain. What I would say is that:

• I would say that at least a third if not half of the homes in the most expensive areas outside of central London are owned by people who wouldn't be able to afford those homes now ie they bought yen plus years ago.

• most people who have been here for ten plus years have flipped a property and done very well - we bought at the top of the market in 2007 and still doubled our money.

• houses are nice by London standards but where I am from originally they would laugh me out of down for spending a million plus on a semi bulky in the 80's

• yes we are paid well, but the hours and culture can be brutal and the cost of living high (I pay my nanny 40k plus a year). When we did the maths of staying, the best financial outcome was to move out of the SE, but mortgage free and take large salary cuts.

The people who ho really amaze me are those who make the SE work on lower incomes like teachers and nurses

I think so much of it is due to record house price growth & low interest rates. I’m in my mid 30s & have done well out of property but if everything else was the same & I was a few years older I’d have made a 1m profit.

As other posters have said even with great salaries it’s very different for today’s youth. I’m in SW London & my sister bought in NW, in my parts prices have not changed that much over the last few years. Flipping is much more expensive as the houses are more expensive & you have to factor in stamp duty.
How is sustainable? The market is struggling because of affordability. Is the 2 bed flat in Z3 that’s now 500k really going to be 700k in 3 years?

So it seems no 1 factor is the increase in property prices.

Where does that leave future generations?
Those starting out in similar jobs to the ones who are 20 years older?

The lucky ones will inherit and reap the rewards of the house price boom.

The unlucky ones won't.

Having so much wealth concentrated in housing entrenches inequality.

This is why I'm encouraging my dn to go into finance. She is gobsmacked at prices etc in London- in her deprived Midlands town there is very little aspiration career wise and the top house price for miles around is about £300K. At Cambridge she has really seen how the other half live and has just accepted an internship as a consultant in tax on practically the same salary as me! My parents thought being a teacher or a nurse was a top job. Although these jobs are very worthy, they are just as stressful as some of the higher paid jobs paying 10 x plus salary (exception I think, being a Doctor).

I am gently encouraging my academic ds to also consider highly paid careers such as finance/engineering as we live in London and will struggle to help him on to the property ladder ourselves unless we inherit.

It’s definitely property prices more than anything.
My brother was homeless, got a council flat zone 1, bought it for 70k 10 years later.

Met his partner, decided to by a house in zone 2 for 200k on the back of the increase in the flat.
Rented out the flat.

Between them those houses are 1.5million and the flat brings in 2.5k per month income.

Pretty scary when you think about it, I couldn’t even afford to rent his flat from him! I have no chance of ever owning. Ever

Most of my friends have had that luck, and inheritance to help at the right time.

Is the party over for London though?

^Where does that leave future generations?
Those starting out in similar jobs to the ones who are 20 years older?^

Look back to the 80s/90s and then forward again 20 years... Oh wait...

I'm not sure if the OP is asking a loaded question or is genuinely wondering.

tokira, what is your first point?

I am genuinely interested, and equally interested in how this will pan out for my dc

I don't think those in their 20s are going to suffer quite as much as some people think, though I doubt they will see such large rises in house prices as we did 2008 - 2018.
Take a young, professional couple in their 20s - between them they'll probably be on £80k, take home £61k. Saving up for a deposit, they could put away 30k per year. Within 3 years they will have a 90k, and assuming they have progressed in their careers could expect to be on a joint income of £100; so should be able to buy a decent flat for £450k.

Ifailed, lots of big assumptions there. Especially on the fact of how much a professional couple earn and will able to save.

Your assumption is based on no student loan payments, or pension contributions.

Not sure where this well to do couple are living in London either when a room in a shared house costs £800 plus bills.