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?

@ThankmelaterOkay I didn’t say that was our total deposit…I mentioned it as it was a factor that some people do not have.

We also scrimped and saved, didn’t go on holiday and got a 1% mortgage.

I bought in 2019 and even at our stage of 400k to 600k flats or small houses in the London suburbs, I barely know anyone who didn't have help! None of us have kids either..I know 3 people who had houses bought for them in cash and those are the people who decided to tell me!

We bought our house for £1.3mil in 2019. We both come from working class backgrounds and have received no financial help from our parents. Did our degrees, worked our way up from the bottom in our careers, worked hard and saved for many years for a deposit. We bought our first flat in London for £250k and were very fortunate to sell it for £550k four years later. We used the equity to buy a family home (30 mins train out of London) for £575k which we extended and then sold for £750k six years later. We then had £600k equity and savings in our late 30s to unable us to get a bigger mortgage to buy house for 1.3mil.

Be lucky enough to have been born in the late 1960s in mine and DH's case. No family help or deposits, but before we met we were both able to buy Zone 1/2 flats on our early career salaries in the 90s. No scrimping or saving was required. Interest rates were highish but still cheaper than renting, and it was very easy to build up equity. So different for twenty-somethings today.

Bought first house for £177k when 22 with DH, we scrimped and saved in our jobs, both did well at school / uni, bought in an area we didn’t like. Sold 2 years later for £190k, used money we had saved and profit to buy a £500k house, it’s 3 years later, house is worth £150k more than when we bought, we over pay by 100% a month, DH works two jobs, both earn over £100k. We are now looking up to 1.2m and will have £200-250k deposit. Rest of our equity will go on fees / tax.

However, we could be mortgage free before I’m 40 if we stay so we are considering our options.

No inheritance but plenty of death, I’m from poverty, DH is estranged from family.

Forgot to say, I'm now 28

We and most of our friends graduated in 1996 and had bought our first homes in SE London by 2000 with no deposit or a small sum gifted by family.

Those £100k houses more than doubled in value in less than 10 years by which time we could trade up.

On salaries of £50k + 20 years ago you could get a hefty mortgage at a decent rate and it was easy to buy a house for £400k before turning 30.

Another 10 years goes by and the houses have doubled again pretty much, as have salaries. Factor in those who got married who then had double the spending power, and the next step up to £1m isn't a stretch.

I don't know how anyone starting out does it nowadays because salaries and house prices are so out of sync but for us and our peer group it all boils down to buying in the late 90s.

£1 million mortgage?

Isn’t that like £6/7k month repayments over 25 year term? 4.5%.

I’m intrigued! 28 on £100k. Have you paid your student loans off? Presume you both are similar ages? And got destroyed with £9k tuition fees?

*20 year sorry.

@Scaredtobegin similar age to you and similar deposit for when we move. We are looking up to £1m max but would prefer £900k just because of the mortgage repayments! We also have good salaries that increase annually (for me) and regularly (for DH) and I get bonuses. I just worry about hols and once we have kids, nursery fees and private school fees if we choose. Difficult decision I think

Easy innit

🤔

I think that most people buying family homes at £1mil + are people around 40, like myself. We were lucky that we only had to pay £1k per year in uni tuition fees (or those in the late 40s often had no tuition fees and got grants). We then worked through the boom years of 2000-2008 making good money, living costs were cheaper, travel was much cheaper, smaller student loans to pay off etc. We were able to buy flats/houses with 10% deposits, which then appreciated quite a bit in value and so were able to move up the ladder.
It’s a completely different story for young people in 2023 - giant student loans to pay off, stagnating wages, huge costs of living, every second person has a degree so lots of competition for jobs, aftermath of covid/brexit/war, impossible to get a decent mortgage interest rate…...
In short, people my age were just lucky.

Marry another high earner and wait to have kids until careers are established and savings are built.

then you raise children who you teach that they must get a good education and a good job, so that they can establish a career and build savings before starting their own families. Marrying another high earner isn’t part of that lesson, you just know it is likely because of who they will be spending time with.

Proportionally, yes. Also a good proportion of what takes the current property over the 7 figure threshold is renovations paid for by the appreciation of that property.

This was my own beginnings too. Saving up and sacrificing. I think people want it all now without the hard graft. I see too many people living a champagne lifestyle on beer money , and then moaning when they don’t actually own anything later on life .

It’s the norm for houses here. Many have moved from London and have well paid jobs still in the city.

My sister and her husband bought a £1.4m+ house late last year. She earns about £125-150k a year in tech with bonuses and had always rented before they moved in together (and works so hard she has no time to spend money!) so had 200k+ in savings and shares, and he earns about 55k but had had a flat for a few years which his family helped him to pay the deposit on originally which had about 500k equity in it when sold. So only one trade up plus high salary, low spending, family help.

That’s not entirely true. Me and DP are young 30s and looking at this bracket. We spent years at uni, worked ourselves silly overseas and here in the city - 12-14 hour days. My worst day was 8am to 5am the next day. Then we bought a doer-upper and did that on the weekends, evenings (when we had them), and all of our holidays - we didn’t have breaks at all. We did most of the work ourselves and saw it as a learning journey and made a healthy profit.
We work in professional services so the bonus is non existent and there is no overtime. It’s still achievable but many people don’t want to put the graft in

Well. Amen.

Bought first house (a bit of a dump) in 2011, extended and improved that, had some inheritance to help, spent 12 years there. DH’s career did well, I took a bit of a back seat and did the whole PT job whilst kids young/in nursery.

Once kids both at school, I went full time, got serious promotions, house had doubled in value to around 500k, mortgage was pretty much paid off due to combo of overpaying plus some inheritance, moved to £1million pound house last year. LTV low because we made lots on the last house and we have the salaries to support it. Both DH and I have potential to earn more in private sector - we are well paid (and well qualified) but work for public sector or not for profit. That said, we are clear about our financial priorities - we don’t drive flash cars, I bring a packed lunch and cycle to work.

There are plenty of 20somethings on Reddit (ukpersonalfinance) and Moneysavingexpert who manage to save serious dosh for house deposits on average graduate salaries, including in the South East.

Also - it’s time in the market, not timing the market generally.

Mainly a step up from mum and dad. Having the right social connections through family/blood relations/class, reputation, deviance, being a sycophant, the usual. SE isn't all that great.

Let's take a moment to understand and remember it wasn't (southern) England alone that contributed to the Great British and Irish diaspora that built the British Empire and all its comforts. Especially those afforded to modern day England, SE.

This thread has me hooked. I always assumed people with £1 million plus homes had family money to help buy them or had big City bonuses and few scruples. Now I see how it might (have) been done otherwise. Fascinating. That is of course if everyone is being truthful! I shall take the majority of posts at face value for now. I see there is still an element of luck (family money or buying at the right time) and good fortune (having a good education and someone with the knowledge to guide you - even to the right uni or course). Although I wonder if this luck and good fortune is ever recognised by some posters. Even the risk of being able to take on a vast mortgage is helped by having a family 'safety net'. If you lose your job and default on the loan, you may still have a home or sorts of you can stay with parents etc.

I wonder what advice PP would give now to a younger person starting out. Circumstances seem so different.

Easy. No avo on toast.

Use this saved money to build a Time Machine back to the early 2000’s. Wander into a bank and get a mortgage during your lunch break.

Get 5.5x multiplier on 3x 5 year terms from 2012 to 2017 to early 2022, to 2027.

Then finally you can have that avo on toast.

I’m a lawyer in London and earn v well. Pretty much all of my colleagues/peers who are on the same salary as me were given a hefty deposit for a first flat when we were trainees (10 years ago) and have traded up from there. The couples where they are both lawyers could easily be taking home £500k between them (mid-30s).

I had no family help and DH is public sector so doesn’t earn much (in comparison to me!). We got a 95% mortgage on a 50% shared ownership property in 2014, staircased to 100% then made £150k when we sold it in 2017. That enabled us to put down a good deposit and use some cash to renovate a fixer upper in a dodgy but “up and coming” area which we bought for £550k. That property is now worth c.£1m (we did about £100k of work to it and the rest is house price increases as the area is now much more desirable).

We have no plans to move but could afford to buy somewhere for £1.5m now. Saying that both the house we live in and houses we could afford to trade up to nearby are basically shitty Victorian terraces that would cost about £200k in my home city, so it’s hardly luxury living.