Is the London dream unaffordable for young people?

[fenika]

Other than London being an exciting place to live for culture, fun, experiences, and the like, it is now completely unaffordable.

We are from a working class family in the north. My brother was a complete swot at school and got a place at Cambridge. He became an accountant in the City of London where he met his wife. They worked their way up in corporate careers and built a huge amount of money in property. They are now retired at 50 and live very very comfortable lives.

My dd went to the same state comp, won her place at Oxford to study economics and is now working in finance. Her boyfriend is also in finance. Between them they earn in the top 1-2% of the UK. Despite this, even if they continue in the long term in their careers, they won’t be able to afford much more than a 2 bedroom flat in a nice area. They work just as if not harder in their careers.

Is the dream of moving to London to move up in the world a dead dream?

They probably earn £100k each. So 3.5 joint salary = £700k budget. You can get a good 2 bed flat for that in a decent zone two area. And that's a starter home. So I don't think your logic stands up (for bankers...).

At present perhaps but it's all cyclical.

I think you're right, no matter how hard they work they won't be as wealthy as your brother. That's the reality now for the younger generations.

We can quibble about where they could move to buy a cheaper property that is bigger but the point remains that working hard to get a top job no longer means you are well off.

I know someone who worked hard as a single parent and trained as a nurse - it was a real struggle getting through the course but what got them through was the goal of being able to buy a small house near their family. This goal was achievable when they started the course. They've just finished the course and salaries haven't risen in line with soaring house prices. They're now going to be stuck in an unstable private rented flat for the foreseeable future. And to add insult to injury, the rent has also gone up!

What are you on about? If they earn 6 figures each they can absolutely afford a flat in a decent area or a house in zone 4. So it’s not unaffordable for them is it? It’s unaffordable for people on an average or below salary, like the millions of essential workers in London.

I'm a teacher in London, single parent. If I can afford to rent, I'm pretty sure a dual income couple can and manage to save towards a deposit. Life may not be as affordable as in the north, but unless they spunk their money each month, it's certainly not out of reach.

London is a Mega-Bubble it is going to pop like Hubba Bubba, but the mess won`t be easy to peel off, a lot of people are going to be really really fucked when it goes.

Top 1% of course, you are talking nonsense. Loads of people buy on lower salaries.

they won’t be able to afford much more than a 2 bedroom flat in a nice area.

And what is wrong with a 2 bed flat in a nice area?

Many if us live very happily in areas not considered ‘nice’ but have the transport we need, often a good sense of community and are amongst others in the same boat.

My nephew is in LA admin in, a DP in retail, neither on big salaries, both under 30, they have saved hard and have a sizeable deposit and are buying a nice 2 bed terrace for under £400k. In an area with excellent fast train connections, Zone 3, the sort of place where ordinary Londoners live their lives but is often mentioned in times of horror by MNers.

Of course they do, and rent, last time I bought a meal deal in a London Tesco the guy lurking about watching for light fingered shoppers didnt look like a banker, and Im sure his hours mean he can`t be bused in from Jaywick every day?

The London dream seems very much alive based on the sheer number of 20 & 30 something people you see working in financial services and other well paid careers living in trendy areas like Clapham & Camden & Hackney. Most of them live in flats true, but that is common in capital cities.

Much harder for key workers as a PP mentioned, and for single people. But for your daughter @fenika & her boyfriend earning big bucks, the London dream is very much a reality.

I haven't read such a silly op for a long time. There are thousands of people in London in much poorer circumstances who have managed to buy there.

I live in zone 1, I work in admin in a university and I have no idea what the "London Dream" is. I don't think I've ever heard such a ridiculous concept.

This is about generational timing.

Sounds like your DB got all the benefits of a free top class uni education and was able to get on the property ladder early. Your DD has had to pay 10s of thousands on uni fees.

You can see this play out all over the country, not just London.

@Whatapickle23 the point you have missed out is that today's late 20 somethings are likely to inherit far more than their predecessors! DH and I got nothing. Our DC will inherit directly from their grandparents and sadly probably in the next 3/4 years.

I know loads of young people in London on completely average wages. They live in flat shares and house shares.

I think some of the replies here are very harsh on the OP.

Yes times have changed and it is much harder. Without the bank of mum and dad it is extremely difficult to get on the housing ladder, and the relative housing that can be afforded is worse than 20 years ago.

However it is not just London. And even for the inheritance crowd, the cost of moving up the ladder is tough. So in general the standard of housing for most is lower.

So who is living in all the properties that you'd expect to be able to afford? I've been amazed at the demographic change of my area. Ex council houses now lived in by dentists, consultants, finance sector people (and a builder).

So who is living in the housing where you'd expect that crowd to live? I suspect older generation and new international money. Also I suspect the proportion rented is higher than it used to be. There are probably stats out there to find this out.

My DC are 29 and 25. One is on about £38k the other £34k. Both are teaching, one an early career researcher, the other a secondary teacher. They were both brought up in London. Presently in London.

DS and DIL rent a tiny flat for about 2k pcm somewhere trendy; their joint income is about £80k. DD and her BF both live at home - he is almost qualified. When he is their joint income will be about £130k.

If neither couple had any help it would be very hard to get on the ladder. DS and DIL would probably have to move out a bit; DD and BF would be looking in zone 3/4. They would be stuffed if they were single.

Is it much different to 40 years ago? I recall people were horrified when I bought in the Borough of Wandsworth in 1981 because I couldn’t afford Fulham. As the previous generation were horrified when the next moved to Fulham in the 60s/70s because they couldn't afford Kensington.

How I wish I'd bought two flats in the hovel that was Borough in 1981!

This is all true, but two people each earning over £100k are the definition of people who CAN afford to be in London. I earn half that and have afforded to be here for the past 10 years!

This. They could chose to spend their money on a house if they wanted to. But equally if they want to spend it elsewhere, why is it any of your concern? We bought a flat in London on a combined £60k salary.

There’s statistics here about London household income- note, household, not individual. It’s from 2019. Every London borough is listed. Median household income is £30,700.
https://www.towerhamlets.gov.uk/Documents/Borough_statistics/Income_poverty_and_welfare/income_2019_l.pdf

Haha yes! We bought in the unfashionable (read: NYG, too many poor people) but well connected area that shall remain nameless in zone 3 between Forest Hill and Hither Green and people feel that it’s OK to make snarky comments about it! Never mind that my train to London Bridge is 10 mins and we bought a freehold 5 bed semi with a 100ft garden. (Genuinely not a stealth boast, just trying to illustrate a point). When I speak to senior people they can’t understand why someone would move to zone 3 when they all bought their places in West London 20 years ago.

I think what is different is that a leasehold in London now is likely to be so punitive and come with so many issues that it’s not really comparable to the ‘starter flats’ of the previous generation. You can’t rely on the return and they will bleed you dry.

NYG = Not Yet Gentrified

Your (their) problem is that you think that starting out buying in a nice area is the way to move up in the world. Oh no. If you want to move up in the world by buying London property, you choose the not-yet-gentrified areas - the less "nice" parts.

I think the crucial differentiators are going to be a) when did you buy your house and b) do you pay for childcare and c) do you pay a student loan.

If you’re 10/15 years into a mortgage and your children are at school, that’s a very different proposition to someone paying a mortgage on a house bought post-2020 and paying for daycare (also someone with a student loan on 100k will be paying something like £700 a month). I’m not saying it can’t be done, but it’s going to be much harder. I think this is where the under 30s HENRYs and the older generation don’t really understand each other. Maybe you’ve managed to do all of these things in the last 5 years without family help in which case kudos to you.

Aside, I also don’t buy this ‘just buy a two bed starter flat’ because that’s no longer good advice. Leaseholds are so punitive; when we looked at buying the flat we were renting in some years ago (call it 450k) there was a £300 a month service charge for not very much benefit at all, and it still had huge cladding issues that were unresolved for years, and in the end the management company ran off with the million pound slush fund. At that point we knew that only freehold was worth going for, and that means spending at least 600k in our area (zone 3 in a place that most West London people still think is too dangerous to raise children in) for a 2 bed house. Houses round us were going for 200k 10 years ago.

On what planet is moving to Zone 3 or 4 a definition of it being ‘very hard’ to get on the property ladder? Millions of Londoners live happily in these zones, with good train links etc.

It is right that people need to be very wary of leasehold properties, but a conversion or v small block with shared freehold and freeholders being directors of the mgt co can be a good model, especially if the mgt co has string rules in place. Not all leaseholds are a nightmare. Avoid anything with cladding, a lift, etc.

I’m sure they will be just fine 🤣