How do people afford to live in London?

[Rupster]

From time to time, discussions appear on here about buying property in London.

Often people will say they have a budget of, say, 800K.

I'm just curious as to how people can afford such an expensive property!

If the median UK salary is around 28K, two people earning this borrowing 3.5 time joint salary could get a mortgage for only 196K!

I appreciate London salaries are higher and people probably have some equity in their existing homes, but I still don't see how people can afford so much!!

[DiggersRest]

In 90% of the cases it's luck. We were lucky that dh insisted we buy a house because l was pregnant. This was 2010, dip in the market, no stamp duty for ftb, and some savings from home.

We have a decent size 2 bed house but l doubt we'll be buying a 3 bedder in London. An extra room would cost more than £200,00 more than we paid for this. Crazy

[faceymcfuckface]

It fucking isn't your fault reader

All these people who have 'made' £200k on each successive property purchase could have made just £5k on each and still ended up in their nice houses. It'd just have been easier for you to catch up when you were ready

It's absolute bullshit

But it wouldn't be quite such a great story for everyone else to tell would it?

[reader77]

Threads like this actually make me feel better. I'm a divorced single mum and blame myself for my housing situation. This puts it into perspective because it really isn't my fault.

[faceymcfuckface]

And does anyone else go at couples that manage to save £250k over a decade? You had more than £2k post tax spare income every month? Very luck you were able to earn such good salaries straight away

Pity the teachers and nurses and basically 90 % of people

[faceymcfuckface]

Completely agree with Bitofeverything

It's luck

I know couples on £50k joint salary who thanks to a bit of help bought flats for £200k and then sold three years later for £350k

Whereas single people earning £50k on their own cant get a one bed place if they've always been independent from all financial help

Earning a good salary (50-70k) as a single person used to mean you could have a good standard of living - now it means being able to live on your own renting in a small one bed flat in London

[fiorentina]

I bought a house in early twenties. Worked hard to move up the career ladder in the city, bought a bigger house and then when I married DH we bought together.
It's expensive but salaries are higher.

[Thecazelets]

Just luck and age in my case. Bought a 2 bed flat 20 years ago and gradually traded up to current 5 bed detached. Couldn't happen now - 3x my distinctly average starting salary and no deposit aged 24 bought me a 2 bed victorian flat in zone 2 in 1996. My children won't be buying in London unless we downsize to help them.

[concertplayer]

Now married friends both bought crappy places 20 years ago when they
were single. Now in a decent place and had option of virtually mortgage free (baby at age 41) or remortgage and move up.
They are low-med earners so you need to take the rough with the smooth
Also lots of folk got a good deal on Right to Buy Council homes.
Either moved on or rented out but not to 800k!!

[MissMargie]

Share an illegally let housing assoc property- 350 per month

[babydad]

We brought right at the top of the crest in March 2008 in SW London a one bedroom flat for £200k, lived there for 4 years and had the issues of negative equity and when we had our DS, we had to rent it out and rent elsewhere. Luckily, the market in the area went a bit mental and last year we sold for £72k profit. All that went straight into the deposit into a 4 bed house in SE London that even before we completed, went up £80k and has since come up another £100k in a year. Mortgage is high to be honest at £400k, and we are looking to extend so will take more equity out next year.
A bit of me wishes I had brought as soon as I moved to London in 2004, could have made alot more, but as others have said it, all about timing.

[Bitofeverything]

I've noticed a really abrupt line in London - in that if people are over 40, they could save a deposit themselves and buy. If they're over 30 and had a bit of parental help, they've managed it. Under 30, it's not possible without huge help or crazy salary. Depressing.

[Betty4321]

I know prices have gone crazy since 2010, doubling or more. Lots of it is due to foreign buyers and money laundering pushing prices way up and rippling out of the center of London. However these prices in central London have been falling now for many months in central London and also rippling out. Brexit has just increased this. It looks like these bubble prices have really popped. I wonder how much they will fall?

[Maybebabybee]

I always wonder this. DH and I have a combined income of 110k and we could only afford a two bed flat.

I assume most with a big budget aren't first time buyers.

[Nickname1980]

We live in London and have a budget of a bit more than £800k - ONLY because we've owned property in London for more than 10 years (each). My first flat was £135k (in London). I put down all my life savings as a deposit - less than £10k. Prices then went berserk, my husband and I sort of pooled our flat budget (two sales), borrowed a bit more and we just rode the wave. The money isn't quite real to me!

Neither of us have had any family help. We don't have rich parents. We just got lucky that we bought when we did. Though - actually - we can't afford a family house in our current neighbourhood so we have to keep reminding ourselves that we were lucky!

There's no way we'd have a budget like that if we hadn't bought in London before the prices rose so gigantically. Especially as I work in a notoriously poorly paid industry (creative stuff) and only part time, too.

[Newname12]

No family help or inheritance here.

I bought a small shitty flat in another city when i was 21, with my student loans as deposit, against all my friends advice- why tie yourself down, what about if you want to go travelling, move to another city.....

Made enough money for a deposit on a london flat, which in turn gave me enough for a house deposit.

Many of my friends who told me not to buy my first flat are still trying to get on the ladder. Funnily enough they seem to have forgotten how stupid they thought i was being buying so young and are now banging on about how "lucky" i was . Their problem is they now want to go straight to a three bed with garden, rather than start with a flat like i did.

[indieblack]

I would love to know where the affordable places are now. Like a PP we bought one of the last 3 beds houses in S London for >250k 5yrs ago and next door just sold for 560k We bought next to a more fashionable area and prices have rocketed.

We rented cheap and grim places for 4 years to save but the hovels that we rented for 650PM are now hovels going for £1000PM.

I was sad about being priced out of the area I grew up in in London (though I love where we live now) but had I been 5 years younger I'm not sure I could afford any kind of family home in London now

[SuzyLucy]

A 500k mortgage in our case! Our house is worth about 1 million. Crazy for a 3 bed terrace.

[Whatthefoxgoingon]

For us: large income, living in crappy areas at the start, trading up the ladder, very large mortgage at start, buying many years ago and before kids. All of these factors combined mean we now live in an expensive (several million pound) house. Wouldn't have happened if just one of those factors hadn't fallen into place. So a shit load of luck was involved. Doubt I'd be able to get as far if I'd started on the property ladder today.

[Coughingchildren5]

Yes it is difficult to save but that's because people are trying to buy after they have other responsibilities. If you try to get on the housing ladder after you have children of course it will be more difficult. You have less spare money to save and need to buy more space and your priority is enjoying your children growing up, not skimping on fresh fruit and veg to keep the food bill down. Also you have childcare issues, school issues, less borrowing power...

The conventional younger couple with a fairly typical combined income of 80k should have no difficulty as first time buyers in London.

A family of four who suddenly decide they want to buy a 3 bed house near a good school will have lots of difficulty.

[bittapitta]

Interesting thread. Difficulty now for (potential) first time buyers is that it's harder than ever to save when rents in the London suburbs for a flat/house big enough for a family are £1600-2000pcm+

[ancientwonder]

DH and I bought our flat at £600k four years ago. It's worth about £800k now. He is on a good six figure salary, although not in the City. But we had no family help at all, we paid a £250k deposit from savings amassed from earnings, over a decade since we graduated (we lived in shared flats until we bought our place, rather than paying more expensive rent on a self contained flat).

Our flat is in a fairly expensive area (zone 1) but it's just a 2 bed with no garden. We both work in central London and prefer to have a short and easy commute rather than buy somewhere bigger but be further out, and we don't have plans to move.

[alazuli]

'Those that have done neither are renting.' Very true, Coughingchildren5. I have friends in their 30s with hardly any savings at all.

[suit2845321oie]

Bought at £65k in the late 90's and sold at £140k in 2001. DH bought at £120k and sold at £150k. Sold both properties and bought at £330k In 2001. Sold at £460k in 2006. Bought a doer upper at £445k and extended it buy extending mortgage to £300k. House now worth about £900k. Mortgage down to £250k and about to remortgage for £75k to £325k to extend again. House will be worth about £1.2M after the work. Will leave us with equity of approx £850-900k. We're lucky to have never taken mortgage over £325k but have been offered up to £800k on income circa £200-250k. When we first bought were each on £35k and could never have what we have now on that.

[Coughingchildren5]

Lived at home and saved up.
2003 bought a 2 bed flat for 120k with a 5k deposit zone 5.
2005 sold up for 137k and bought house for 235k in zone 4 an area due lots of investment.
Worked very hard, lived simply, had kids, got promotions, overpaid on mortgage, no credit debt.
2015 sold for 500k and equity meant we had a 400k deposit.
Combined income means we have borrowing power of 500k so if we chose to we could afford an 800k house but instead we bought in a cheaper area, work part time and will be mortgage free in 10 years.
We are in our early 30s.

London has lots of affordable areas but people insist on trying to buy in more expensive areas and then complain about it.

Everyone I know who has bought has either done the simple life thing to save properly (I'm talking about no mobile contracts, no TV, no going out, no package holidays, no shopping splurges, basic phone, two pairs of shoes, shop in aldi, night school for promotion options etc) or had a hand out from parents. Those that have done neither are renting.

Property doubled in value in London over the last decade so people who move out one or two zones have a lot of equity but their mortgage probably isn't much bigger than people living elsewhere in the country.

[RiverTam]

2 previous properties bought in cheaper places (but with help from my dad for the first deposit). Then inheritance.

I work in a not-particularly well-paid industry in London, the majority of people who own their own homes have had parental help or inheritance.