To think London house prices are unjustifiably high

[Alanis126]

I was recently visiting London, where I once lived. It was a big big struggle financially and I wasn't sorry to leave. House prices have been stratospheric for 20 plus years and while there have been some small declines in recent years, I saw a central and fairly nice but ordinary sized flat which cost £1m. There are of course many properties costing way more. There are a couple of things in particular that I don't get. Forgetting the £1m central flats, even a very ordinary property in a quiet zone 5/6 area without much in the way of social amenities was £400k plus. While some people have family money, I think it is fair to say most people start their working lives with no or negative net worth. For many the early/mid twenties will be the lowest point if their income and when they most would like to or benefit from having access to social amenities. When even rent in a grotty house share is £800 plus bills, I don't see how it becomes feasible to live while you are trying to build a career. I know there are other cities but what if you have a job in an industry only existing in London? If houses are £2m or £3m then does it matter anymore what the price is? Could they be worth £5m, £10m,£150m? And while I accept people may still choose a London lifestyle, if someone has London equity and doesn't enjoy their job, is it only fear of being priced out for good that stops them relocating and having a total change of lifestyle?

Foreign buyers. China, Russia, the super rich stick their money in the London property market.

I thought that was reasonable 🤦🏼‍♀️, shows how warped my brain has become.

@Toomuchtrouble4me Your obviously older though (no offence but if your mum is 87). It's quite a bit harder for a young person today to have a few BTLs largely because lending is tighter.

They're overpriced outside of London too. Where I live there are supposedly affordable flats. A 2 bed,tiny, open plan kitchen and living room,have to pay for parking flat is 360/375 k. Fucking ridiculous. Affordable for whom? How they can justify the price when the market doesn't reflect it I have no idea.

I live in London and me and DP are quite good earners and I owned a flat before we met etc etc, we still don’t have a house now but a flat in a good area, the couple of (female) teachers i know well have high-earning spouses, it is just so crazy, either people are really comfy and property-rich as they earn megabucks or were a couple who both had flats etc and then got together, or they are pushed out of London.

I am intrigued how nurses, teachers etc manage, even the younger people I work with, I’m really nosy but it seems so personal to ask. I’m late 40s and it was bloody difficult in my mid 30s when I did buy my flat but nothing like now!

YABU.
It's the capital.

I used to live in London. I was earning 100k excl bonus before I was 30. Yes house prices were high and yes I could have bought a much nicer house in my home town (also a major UK city) but I would have earnt probably a third of what I earnt in London if I was very lucky.

House prices are of course commensurately lower in my home town but you've got to remember that there's more to the financial picture than that.

When you earn a big salary you can be putting way more into your pension. My employer was matching up to 6% if I remember correctly, and because I always 'salary sacrificed' my bonus for tax reasons I was putting away 20k into my pension most years.

So working in London gave me unrivalled financial security at a young age, and that was worth more to me than a nice house.

Having said all that I am amazed that anyone on a low salary wants to live in London. I'd be out of there like a shot.

(yes I hear the 'support network' argument but I rarely sympathise with it: I and everyone I knew in London had moved far away from family, often overseas, to pursue opportunities).

But what do people mean by saying it's unjustifiable? If people are willing to pay the price? It's the same with anything. A house in London, a house in Middlesbrough, an Aston Martin, a Ford Focus, a train ticket, a pint of milk. There's no difference. Who are people who are justifying or not justifying any of those things?

A capital city will always be more expensive but the UK inflated housing market is insane and the prices now for houses in London and other expensive areas around the UK mean less and less of the younger generation can buy in these areas unless they inherit. Means wealthy gap between groups widens further.

Also, what happens if amd when the worst room in a shared house in the worst part of London is 100% or more than take home pay for these jobs?

I wonder about this too and I don't think it's fair to just say "it's the capital". If there are local jobs paying full time minimum wage then those employees need to live somewhere.

antlady

@Toomuchtrouble4me Your obviously older though (no offence but if your mum is 87). It's quite a bit harder for a young person today to have a few BTLs largely because lending is tighter
Yes, that’s true but my eldest is 21 and he’s just bought in London. My second is a teacher and she’s got subsidised teachers accommodation - 1bed flat for £120 week. There are lots of schemes for essential workers, shared ownership is another route.
I suppose I was answering the question - why do people stay? Because it’s our home, our roots and our family, just like anywhere.

yes I hear the 'support network' argument but I rarely sympathise with it: I and everyone I knew in London had moved far away from family, often overseas, to pursue opportunities).

Having strong finances is also a form of support giving more freedom, for example a young family on a low wage may need family support for childcare as they can’t afford it without family help. Also if a person has health needs a support network is more necessary. You speak from a place of privilege.

(yes I hear the 'support network' argument but I rarely sympathise with it: I and everyone I knew in London had moved far away from family, often overseas, to pursue opportunities)
Exactly - but when you’re from London you might as well stay as the opportunities are right here. I just love this city but yes, when I was in my 30’s it was much easier to borrow.

@toomuchtroubleforme, may I ask did your 21 year old son buy on his own or shared ownership? Did he have help with a good sized deposit?

@Toomuchtrouble4me

Can I ask where your daughter is (in London?) and how she can access such cheap rent? I didn't think keyworker hsg was that cheap

Yes - Son has shared ownership in Maida Vale and daughter is in an essential workers co-operative in NW London.

It’s a fully mutual co-operative, they are quite rare, but they set their own rents as tenants, it’s a great scheme.

Thanks, @Toomuchtroubleforme I will do some searching

Because it’s our home, our roots and our family, just like anywhere

I totally agree with this & it's great you're dc could access those schemes.

@chocpear it's true I speak from a place of privilege now but the point is I got the financial freedom by moving away.

When I arrived in London I had student loan debt and a few hundred quid in my current account. I found the cheapest possible room, it was an absolute dump and I didn't even have a bedroom, I had one of those high sleepers in the living room

But it was only for a few months, by then my grad salary had kicked in and I was netting 2k a month and could rent a nice place with friends.

If I was earning say 30k in London but could make 25k in Nottingham (random example) and afford to rent a house I'd move there and then have kids - maybe we could even afford to rent on one person's salary there while the other stayed at home with the kids or worked part time nights or something.

That's what I'd do, personally. No way I'd be a key worker in London unless I was married to someone mega rich.

It's definitely very skewed against the young & they have to pay more for much less "reward". If you look at my road the 40 yr olds are probably paying £600 mortgage, the 30 somethings (me) 1k & the 20 something's 2k plus in rent. The older generations have/had normal jobs where the younger people have to earn 6 figures.

We had to leave London. There was no way we could make it work on our average salaries once we had kids.

All the people saying it’s justifiable, the logical conclusion of that would be for prices to keep increasing and a mass exodus of anyone earning less than, say, 80k. So there’d be no tube or bus drivers, no shop workers, no cleaners, no binmen, no nurses, teachers, carers, taxi drivers, caterers... need I go on?

It’s a ridiculous argument to say people on lower salaries should just leave. These are the people we depend on to keep society moving. The entire infrastructure of life would grind to a halt without them. It’s staggering really that anyone thinks it is justified that something as basic as a secure home is out of reach for regular people. We need a complete property overhaul in London - a ban on foreign buyers, stricter limits on BTLs, rent caps, the criteria for shared ownership reassessed, more actual affordable housing built... the list goes on. A crash is long overdue. Why should people have to move away from their support network? A home should be a basic right not a privilege.

@dodgeballchamp they don't have to move away but they might need to accept that they can't afford kids / to buy property. I had to leave my family behind to pursue career and financial opportunities. It's not forever. I am getting close to being in a financial position to be able to consolidate a few investments and move back to my home town so that we can have kids near my parents.

I'm not suggesting everyone can earn a high salary or buy property or save. I am only trying to illustrate that the 'support network' argument is pretty sloppy.

Carers need their support network, the elderly and/or ill need their support network, the bereaved need their support network. Beyond that sorry but you're just making excuses for prioritising proximity to family. No shame in that - if you'd rather your mum ten miles away than own a flat cool, but don't claim you are a special snowflake that needs their support network in a way that doesn't apply to the millions of people who make sacrifices and move for work or for a better quality of life for their families.

Does that sentiment apply to locals priced out of Cornwall & the like?