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?

To be in the top 1% of income tax payers in the UK, a taxable income of at least £160,000 is required. £236,000 is required to be in the top 0.5% and nearly £650,000 to be in the top 0.1%.

If @fenika's chief point it that things were far easier for her brother's generation compared to her DD's in terms of purchasing power from comparable career/ hours, then yes, she is absolutely correct. House prices relative to salary were far cheaper and you could buy far more with your salary and then benefit from house price inflation, large gains in shares, etc. This has changed considerably for today's 20 somethings.

DS and his partner live in a very expensive area but Zone 6. He's a Head of Departnent in a local secondary school and she's a senior nurse just outside London. They rent a 1 bed flat which isn't cheap but hope to buy next year. A 2 bed terrace in their current area would set them back at least £450-500k so they'll probably have to consider a cheaper area with a longer commute.
I wish there was some help for key workers in London but that's a thing of the past in most boroughs.

The problem is now even all the shit areas of London are extremely expensive for the average person. As are any areas close to London.
It’s pretty fucked up and quite a life of poverty for anyone who isn’t born into money or on a ridiculously high wage.

The property party is over!

@Sublime66 Croydon?

Croydon, what an overpriced uninspiring dump.
If I were young, without family in the south, I would move up north 100%, or head towards Wales, English midlands.

Todays 20 somethings are inheriting far more than previous generations, my dc my not have bought yet but they stand to inherit the estates of multiple people at some point

@Sublime66 that's what people.said about Wandsworth in 1980.

Some inherit huge amounts but many inherit nothing at all, worsening the divide even further.
The average age of inheritance is around 60 years, when it is of jolly limited use in any case.
The chief reason that some 20 somethings may inherit is because of asset price inflation and hugely favourable pensions which have benefited (many of) those who are 60+. These things are recent developments, particular to a couple of generations only.

I know that, and Hackney etc etc. But we’re not in London in the 80s anymore, London is ok but it’s really not what it was. All the free thinkers and artists have left for places they can actually afford to live in.
If you’re going to pay £500k for a 3bed terrace in outter London, why would you bother living in shitty Croydon when there are much better choices all over London and the U.K for similar money or less.
Everywhere close to London has been gentrified to the max and has no real soul left.

@gotomomo actually very few are inheriting much. Average people with one home will often have to sell to downsize and then sell again to fund a care home. It’s certainly not wise to be relying on any inheritance, especially when a huge part of it is taxed.

Some will inherit lots for sure, my DC potentially among them, but it's quite likely to be too late to be that much use to them. My family is long lived.

The UK output per head remains below that of the 2008 financial crisis... Since Brexit the deterioration of the country's economic standing accelerated with highly paid professionals gradually moving back to Europe. This means that we are way past peak gentrification in London. Higher immigration, which is required to make up for the country's increasing inactive population (older age, health conditions and structural poverty) will prop up the lower tier housing stock. However much of it is funded through the ever rising housing benefits bill, leading to higher taxes. Removal of the state pension, looser immigration, privatisation of the health service and cuts to corporate tax are the only hope to provide a future to our offspring.

Lot of people here don’t leave in London so don’t really get it. It doesn’t matter much how much you earn, a 4 bed house in a good area with garden and good school is going to cost the best part of 2m for nothing super fancy. Now, if a couple on 300k does not have BOMAD, they will have to save 800k since they can probably only borrow 1.2m (if that). Now, 300k will see the tax man taking 130k, the 170k would need to cover childcare (18k a year per child), rent (~35k a year), holiday and daily expense. We re talking about many many years of saving and a mammoth mortgage to access a family house bought by much less successful boomers for a couple that clearly did very very well for themselves. What is the doctor and the architecture couple suppose to do, leave in a 2 bed in zone 5?

South Croydon isn't so bad and a commute to Victoria could be as short as 20 mins. Sutton is safer and affordable too. I'd rather live in a place like South Croydon than up North or even Midlands. I've lived up North for a while and it's really not for me (won't list reasons as it'll trigger someone) but each to their own.

I think your definition of a good area is different from most Londoners. It is absurdly expensive, but you don't need to spend £2m

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.

This is true. Of course the OPs dc can buy but they will likely never accrue property wealth like older generations. Plus income hasn’t grown much over the last 20 yrs (except for this yr) & more of it is tied up housing costs, paying into pensions, student loans for young people.

Im sure I read more FTBs left London to buy than ever before last yr. I do think the rise in hybrid working means some people who
would have bought a flat will move further out for a house.

@Fretfulmum agree with you re flats.

that's what people.said about Wandsworth in 1980.

Not all of Croydon is bad but the days of gentrification are over now I think due to remote working & ageing population. London primaries are suffering due to huge falls in pupil numbers due to lower birth rates & families leaving London.

It doesn’t matter much how much you earn, a 4 bed house in a good area with garden and good school is going to cost the best part of 2m for nothing super fancy.

London is expensive but that is nonsense

Agreed - prices are bad enough without exaggerating them!

What’s wrong with a 2 bed in zone 5? I really don’t get the obsession with a “4 bed detached” on MN like that’s the pinnacle of achievement in life. Also you’re talking bollocks, you don’t need 2m unless your definition of a good area is one square mile in Islington.

Agreed, there are still some affordable parts left in Zone 5 down South and in East. Plus it isn't a wasteland - you can still get into central London fairly fast.
Having said all of that, in another 5-10 years even Zone 5 will be completely out of reach.

perhaps that poster has a very narrow definition of good areas or doesn’t know London that well!

You can buy houses for far less than 2m in z3 & z4 within catchment of excellent schools

I am young and in London, and they will certainly be able to afford to buy in London however it's unlikely they will see the huge London house price rise your brother saw ... which likely hugely increased his opportunity