How do people end up living in a £1 million house?

[shortsaint]

As I do my nightly peruse (daydreaming) on Rightmove (most expensive first) I am wondering how people end up living in a million plus property?

I do not live in the south east or Home Counties, just an ordinary Midlands town. I consider myself fortunate as we come to the last couple of years of the mortgage. We probably have the lowest value house of my friends, with an above average joint income, 2 kids, both work f/t. We have had 2 houses in 20 odd years so haven't followed the property ladder, had no inheritances or windfalls. Is that what it is?

@shortsaint
commonslibrary.parliament.uk/research-briefings/cbp-8027/

'In 2018/19, London, South East and East of England all had net fiscal surpluses. In these regions the revenues raised were greater than the public spending received. All other countries and regions had a net fiscal deficit with each receiving more public spending than was raised in revenues.'

This is why levelling up is really important. But the tories are not going to achieve anything meaningful.

@onlychildhamster Thank you for clarifying. Very interesting. I do like how you've mentioned levelling up (though under BJ and his cronies isn't this because of the 'Red Wall'? Anyway you're right - won't happen.)

@shortsaint I use the term levelling up for lack of a better term. The government hasn't really defined what it actually means, which is why I don't think they will deliver on it- they don't have a concrete definition! Also cutting their plans for the expansion of northern rail isn't a good sign.

I do think moving the capital to manchester or birmingham would be a good move. Many countries don't have the 'economic' capital or political capital in the same city. We need to do something drastic like that. I work with lots of people who are not originally from London. Examples of things they have done/planning to do post pandemic:

1. Move to Kent and paying £40 a day to commute to London
2. Buying a house in the midlands near family and staying 1 night in London every week at sibling's house in London in order to work 2 days at the office and enjoy london job prospects + cheaper midlands property

This is what the majority of people will be doing. The data post pandemic supports it. More than three quarters (77%) of the 74,350 Londoners buying homes elsewhere moved to the South East, South West or East of England, according to Hamptons’ research. This still means they will be part of the London/SE bubble. if you take a broad view of it, the boundaries of london have never been static. I was just looking at the 1921 census and 100 years ago, my zone 3 london neighbourhood (which takes 20 mins to get into central london excluding walking time) was rural countryside and there was even a farm where the eccentric owner kept a collection of exotic animals including a tiger. But when you check the 1939 register, my flat was already built and the person recorded as living in it was a 21 year old 'telephonist civil servant' so someone who probably worked in central london. My area only got the tube in 1939; it only had railway connections prior to that. So someone moving out to Kent/the Home counties hasn't really left the london bubble; it may even be considered part of London in later years.

I say this because some people think that if london suffers, it means the rest of the country would do better. That is not necessarily true. I dont see how someone who works remotely from Midlands is helping the region economically other than increasing house prices...A lot of politicians hope that by building lots of housing in the north, this will encourage younger people to move. I think its not as simple, young people have been priced out of london for the past 10 years but most people still stay within commuting distance.

Who is going to buy all the million pound houses in London without significant wage rises in the next 20 years? These threads always have over half of the posters saying the couldn't afford their house if they were to buy it now. There must be whole streets of London terraced houses with people in this situation. So where is the demand coming from?

In London there are plenty of people in their twenties taking home six figures and frequently couple up, so it’s quite straightforward for them to go over a million on a first house.

But also a lot of family money sloshing about - someone will die with a London property and that will pay for their children/grandchildren’s million pound property. When we were looking at houses involving an elderly person having died or going into a home it was clear the family were very involved in the sale, sometimes with a very clear eye on their payout!

@mjf981

Who is going to buy all the million pound houses in London without significant wage rises in the next 20 years? These threads always have over half of the posters saying the couldn't afford their house if they were to buy it now. There must be whole streets of London terraced houses with people in this situation. So where is the demand coming from?

This is an odd question . The answer is clearly the same as it’s always happened, people moving up the ladder, High salaries, savings, inheritances. How else?

This is an odd question . The answer is clearly the same as it’s always happened, people moving up the ladder, High salaries, savings, inheritances. How else?

I don't think that's an odd question at all.

In the past many have traded up due to huge equity gains & inheritances.
However in London today the age of FTBs is higher & prices are already so high that it's much harder to build equity. Wages have been stagnant for a long time & aren't going to increase for a while & despite high wages lots of people still need family help.

Many people are stuck on the ladder hence why the stamp duty reprieve led to a surge in movement. I also think inheritances will start to shrink, it's one thing to have bought a house for 100k & have a good pension & sell it for 1.5m & have enough left to downsize & give chunks for dcs deposit. It's another to have bought a house for 600k & sell it for a 1m but need it to top up pensions, downsize & help the dc.

Plus the cost of care, I know the new plan is capped at 80k ish but it doesn't include accommodation & obviously for many people that will eat into their house value. And I think there will be increased taxes/levies as the new h&s levy won't be enough to fund the ageing population. Care in the home will likely change to include house value in the means testing.

I read that a record number of FTBs left London last year to buy which I think will be an ongoing trend due to budget constraints & remote working.

There are still plenty of houses in London that are way way below the million pound mark for gods sake. Sure they maybe in less desirable areas but they exist. And on top of that, people inherit those which their parents currently live In. The answer is absolutely the same as it’s always been, high earners, savings, property ladder, inheritance etc

Some folks are acting like you can’t buy a house in London for less than a million and no one inherits them 🤣

Some folks are acting like you can’t buy a house in London for less than a million and no one inherits them

who is?

Also London has always been a very international city and would become increasingly so. So many people would bring in money saved from their home countries which have far more buoyant economic growth. Much of Rishi Sunak's net worth is derived from his wife who is the daughter of an indian billionaire and yes probably part of the reason why they can afford a house in central london. There are far less million pound houses in New Delhi than in india (I am guessing) but the indian middle class and upper middle class is growing at an exponential rate and if even a small percentage of them make their way to london at some stage of their lives, they would have money the rest of us might not have. For example, there is no point wondering how international students like me could have afforded to pay university fees in full when most local british students have to take out student loans; not all the international students I know were necessarily 'rich' but savings/tax/earning potential were so different in their home countries.

Also I know so many british people who have worked in low tax jurisdictions and they will be in a better place to purchase london property. I remember a really interesting mumsnet thread about a British lady who was living in Saudi and lots of people were attacking her but she said she didn't care; what mattered to her was buying a house with cash mortgage free and sending her DC to private school in the UK when she came back. I have never heard of any british person who has always lived in London (or indeed anywhere else in the UK) being able to do anything like that!

About 7000 homes in London last yr were sold for more than 1m.

"London retains a dominant share of high value homes, with more (54.5%) £1million-plus homes than the rest of Great Britain combined"

"But the number of £1m+ homes in London have slipped back in the past five years, across the Midlands the North of England, Scotland and Wales have risen by 20,476"

But London is relevant OP - I suspect a lot of the 1 million plus houses in the Midlands are sold to people selling up their London house

"I also think inheritances will start to shrink"
There's an enormous amount of money about to be inherited from the rich baby boomers. People tend to inherit later though and pass inheritance on to their dc if they don't need it.
One of our dc's spouse has just inherited a fortune.

There's an enormous amount of money about to be inherited from the rich baby boomers.

My Mum is one of the oldest baby boomers, born in 1946. She's mid 70s, in good health, very active and based on her parents will probably live into her mid 90s. The youngest baby boomers are just in their mid 50s. The richest baby boomers will probably live the longest (life expectancy is linked to affluence) so I think the biggest baby boomer inheritances will be trickling through over the next 40 years rather than happening any time soon.

I know someone who has an expensive house, in a desirable part of a non London city. As a couple, they each had their own flats and good jobs, and only recently pooled their resources. They have no children, so are cash rich. And decided that mortgage borrowing is cheap and therefore worthwhile.

@JaninaDuszejko but the richest baby boomers are also the most likely to be able to afford to liquidate their assets. A lot of people complain that there are no suitable properties to downsize to, but actually there are a lot of options if you have a high budget. I was just viewing a flat in hampstead- 3 bedrooms and apparently a nearby apartment in the same building with high specs sold for 910k (160k above what the flat I was viewing was valued for!). I am looking for 3 bed flats then and most of them in my area are owned by downsizers who paid quite a decent amount as they could afford to. They could afford this as they were downsizing from a property worth £2-3 million. I am sure you can afford a nice bungalow for that if gardens are your thing. Also when I was buying my flat, a lot of the landlords selling were elderly people selling off their BTL properties, probably to give the money to their kids.

In contrast, my MIL is a baby boomer who owns a single property and she would not be able to do the same. firstly her house is 750k and a tiny 2 bed flat flat in the same area is 400k so after stamp duty and costs, she may not even be getting very much and would have a vastly decreased amount of space/standard of living - might be cheaper to do an equity release mortgage. Unless she completely moves area. She has less options than the richest baby boomers.

My point was that inheritances are not about to shrink though. Massive wealth will be passed on starting fairly soon as average life expectancy is currently around 80, yes and possibly lasting for the next 40 years.

Sorry my point wasn't that inheritance cash would shrink it was what would be left in the pot to be inherited by others that would shrink. I think CGT will increase at some point & it's likely there will be some other tax increases to target housing as their won't be an NHS in 40 years unless we have a severe cash injection & they won't be enough younger working taxpayers. The current system isn't sustainable imo.

There is also an economy theory that as it's baby boomers with the most wealth in housing as that large demographic starts to die out the glut of supply will depress prices.

And I didn't say they would shrink tmw just it wouldn't be like the past. More people will get pulled into paying IHT too as the bands won't move.

Buy one, sell it for more than you paid and repeat.

My neighbour’s house has recently sold just over £1m. He bought the house 35 years ago (not sure what price) and the area has become extremely affluent in the last 25 years so just very good luck. I live the West Midlands in a very well off/affluent area.

@jeepersdeepers aren't the tories talking about relaxing visa restrictions for educated young indians to work here on 3 year visas? they would pay taxes and would have minimal healthcare needs. I thought that was the plan? I mean certainly it is the obvious solution since the birthrate is probably not going to increase and we are living longer and longer.

@CrazySnakeWoman

Bought 25 years ago in a shithole area of London. Shithole became a hipster area. House is worth ten times what we bought it for. Luck I suppose.

That luck has run out for Londoners now, though.

Same as my parents. Shithole to hipster. £46.000 to 1.5 million. Crazy.

Someone in a commercial/professional job in London should be on +£100k plus by their early thirties at least. Two salaries like that x4 and and a deposit = £1m easy. Hence mile after mile of small London houses all costing +£1m.

Someone in a commercial/professional job in London should be on +£100k plus by their early thirties at least.

If by commercial/professional you mean ‘City’ then maybe. But generally… no.