To ask how so many people can afford to spend 1 million+ on a house (SE)

[BettyBoopBetty]

That’s it really. Where we live most houses go for sale in the region of a million and more and many of the buyers are young families. I don’t get how so many people can afford that sort of money on a house!? If you do, what is the secret? Very highly paid jobs? Family inheritance? What’s the norm?

I am 31 this year and I lived with my MIL for 3 years to buy our first flat in 2019. We saved £90k in 3 years and this helped us buy a 2 bed flat for £392k.

I don't think not going on holiday or scrimping will get us to a million pound house though! We have overpaid but even with salary increments, we could buy a bigger flat for £550k to 600k (I commute daily so would rather live more centrally)..
That's quite far from a million... You need to be on much higher salaries for that!

It all sounds wonderful what you have no but I don’t doubt you’ve both put in the work order the years and am pretty sure you will have stressful jobs. Every credit to you both 😀

That’s not the conclusion I come to after reading this thread. These are mostly people who have experienced a lot of luck - born into families that supported them to get a good education and good jobs, large inheritances, and insane increases in property prices.

We have terrible levels of social mobility in the UK.

Did you buy between 2008 and 2011? What fixed rate mortgage did you get?

2010. I can't remember what our fixed rate was unfortunately.

Ours is a combination of substantial inheritance (DH's uncle left him £100k which was our deposit on our first flat), benefitting from crazy property price increases + plus paying down the mortgage over 15 years + low interest rates so we were able to put down a £500k deposit and then being a combination of higher earners + going 50/50 repayment/ interest only on the mortgage and mortgaging until we are 70. We intend to pay down the IO element as we go along, but if we don't, we'll sell and downsize.

The key for us is having a family house whilst our children are at home to benefit from it. Our mortgage is less than half of what it would be to rent the equivalent in this area (that will go up when we remortgage in 4 years obvs).

there is a huge difference between us (people who bought in 2017-2020) and those people who bought a good 10 years earlier in terms of affordability.

I was lucky in the sense that london flat prices have not risen since 2016 and dropped 50k in my case when I bought in 2019. Yet at the same time, many of the towns around london have risen in price that they are practically london-esque prices. The flats in St Albans are now worth the same as my flat in London!

Anyone who purchased a house before 2011 will be quids in. Its simple as that.

We recently bought a 4 bed house for over £2m in London zone 1. DH works in a senior position in a major tech company and paid the deposit out of savings. It included money raised by selling some of his shares in the company he works for (they were paid to him as part of his salary package, but he'd held them for over 15 years). No inheritance or family help.

We're not a power couple - I earn min wage and haven't really contributed to the housing costs. We're in our 40s, so not young, but we have 2 dc aged 5 and 1. It was our second rung on the housing ladder - we bought a 2 bed flat in London zone 1, over 10 years ago. But we still own it, so the rise in equity didn't affect the financing of our new house (although once it's sold we'll have a big lump sum to pay off the mortgage).

My partner and I have just bought a house together. We both have equity from our previous houses. Plus partner works in the energy sector and paid high salary. I work full time as a teacher and tutor. We bought our dream house in SE - Sussex. We are both 50 and still have children who need a home - thus 5 bedrooms needed.

DH took a risk being paid partly in equity at a start up and was instrumental enough that when he wanted to leave they upped the equity. We cashed out of that mid 30s and bought our first house in cash about 8 years ago.
I have never earned that much but had a council flat & RTB as a key worker in London in the early 2000s. Not a great financial decision, but I didn't buy the flat, just moved out and left it when we moved in together.

I wonder this as we live in a similar area where even a nicely done 4 bed semi is £1m. I feel like my husband and I ought to be able to afford one but we are still some way off! I think once we finish paying nursery fees we will. We have maybe £400k equity in our 3 bed mid terrace and our combined salaries are £150k. This is the only property we have ever owned (bought in 2012) and we did get gifted £50k at the time which was essentially inheritance.

I’ll speculate for you.

under 2.5%. Presumably for 5 years. Then in 2016 you hit up another 5 years at 2%. Then in 2021 you snatched yourself a lovely 5 year at <2%.

15 years at an average of about 2%.

You can buy a lot of avocados on toast with the money saved on free money.

2015, 2020

All the people I know who have large homes have followed a similar path, starting from nothing:
1 - Do their best at school.
2 - Get a job that has some some of career path (banking, finance, etc)
3 - Whilst working do further study at nights, weekends, day release if employer allows.
4 - Change jobs every 2-3 years to capitalise on new qualifications/experience gained and get that extra £5k each time.
5 - Get good working relationship with seniors so that when seniors leave for pastures new they call you to come and work for them, in more senior position with more pay,
6 - Repeat steps 4&5 many times.

The people I know that have done this were not academically gifted but are conscientious and work hard. Both females and males. They are currently earning £180-£250k p.a. at age mid 50's, kids at private schools, massive houses, endless holidays etc.

I did very similar starting as a very lowly paid trainee at age 17.

It's not all about parental financial help or uni degrees etc: Following the above path just needs parental guidance and motivation. Good luck.

Many people bought at the right time. Simple as that. We bought somewhere in London in 2007. Cost double what the previous owner had paid in 2001. In 6 years, that guy made £150,000! There are a lot of people who cite hard work and sacrifice but actually many benefitted from being born in a certain year/s. Clearly some people have worked hard for what they have but many 5-10 years older than us certainly gained as the housing market grew. Equally, we have benefitted more than the generations that will come after us.

It's £900k for a not amazing three bed where I am. Bought our first flat in 2010. I'm the higher earner, DH is a teacher on 60ish. Current terraced house was bought for £305k now worth £700k which is kind of irrelevant because to even move sideways would cost the same.

Career choice is everything and there needs to be more education around it.l

Agreed with those saying when you bought makes a massive difference. Similar to @socialmedia23 I could have bought the same house 2 years earlier for 3/4 the price. The other things we've noticed makes a big difference is family help with childcare - if you know you'll have to pay £2.5k a month childcare you can't go for the bigger mortgage so you have to put off buying the bigger house by which time it's worth more and you can't afford it - and pure dumb luck in being able to pick the house that rises instead of just the one you can manage to get to work from.

I think we'll be able to get a million pound house in a few years if things level off a bit but it'll be a mix of inheritance, equity growth, and an enormous mortgage based on a very good salary which we'll only manage if interest rates drop. I'm not sure I'd want to though, it seems like a millstone.

@ThankmelaterOkay I bought in 2010. Rate was 5.6% which was the best we could get in our circumstances.

I agree with @Peashootpetra, previous buyers paid a fraction of the price we paid for it years before. Our buyers paid a substantial amount more than we did.

If we were that age now, buying for the first time in the same jobs with todays salaries we would not be able to buy our previous home.

Luck
and buying whatever I could afford in London with a huge mortgage, small inherited deposit, low interest rates, a good friend as flatmate and a bank manager you could talk to.

I went in and said I wanted to buy, had deposit and no job, straight out of uni, but did have a flatmate lined up. He told me to get any job and he’d see what he could do, so I started temping.

it was small, semi basement 2 bed flat, and not in great condition, but central and with a garden & garage in zone 1, just south of the river. Couldn’t afford north!

sold that 4 years later for double what I’d paid. And with that bought a 3 bed terraced house in zone 3, with a tiny garden, again not great condition but liveable.

Over 8 years we did work, loft extension, new kitchen & took walls down, while building works and materials were reasonable. Sold up 8 years later for double what we’d paid. And moved further out of London to commutershires to a newish build detached with 5 beds. Which is now just worth £1m over a decade later.

But without that initial small inheritance and crazy London property prices we couldn’t have done it.

the really annoying thing was I already lived in zone 2, beautiful area, but fresh out of uni it was too boring. DF bought a 2 bed flat in zone 2 at the same time as I did in zone 1, and his tripled whereas mine doubled and when I was married with DC1 on the way I was then priced out of zone 2

Im 61. My first place was £80k. Bought and sold several times, creeping up the ladder as my salary increased. Then bought a house with my husband so massive jump there.
Most people I know bought as soon as they could, with other people if necessary. Then bought with their partner a bigger place with bigger mortgage. Are the people buying £1m young? Or 60 like me?
Inheritance, bank of mum and dad, working in a high paying job, saving for years while living at home or bedsit or group house - that's how.

Single mum here. Will never have a penny of inheritance and had to buy my ex out of a divorce/house but still managed it...through working very long hours, working in a well-paid field, and prioritising where I spend my money. Don't give a hoot about fancy cars/clothes/handbags but my home is important to me.

No family help here, just bloody hard work to save a deposit and one high earning career, the other middle earning

And that 2 bed flat DF bought in zone 2
it’s now worth just under £1m he paid just over 1/10th of that in 1999
no chance to extend beyond a small side return which isn’t really worth it.
Tiny kitchen
Tiny bathroom
great living room & master bedroom though, and a smallish garden, on a beautiful quiet road
over the years we’ve required and added a new kitchen and bathroom, but basically done very little.

London prices

I inherited it very recently after he died, and plan to keep it so my DC can eventually sell it and buy something outside London

*rewired

Meanwhile, outside London, I know almost no-one in their 30s earning 100k+. Houses are also much cheaper. And that's fine - but London property appears to be only for people who are earning London professional wages (that rules out all the people on minimum wage without whom society would grind to a halt, not to mention most people who work in the public sector), who have previously invested in the London area and benefitted from the London hyperinflation affecting housing.

London is a silo, i think.