Depressing difference in house price outcomes

[coldaire]

I’m a teacher, as is dh. When training to be a teacher we made some lifelong friends who became a couple and got married.

None of us come from any family money. So just teacher’s salary.

We bought where we were from in the North. Bought in a nice place near a city. Paid £250k for our house in 2006. Our friends bought in a good part of London for £250k in 2006.

Our house is now worth about £370k. Our friends house in London is worth £1.6mil. Neither of us have extended and they’re both a similar size.

Friends have now sold up, retired to the coast, and given their daughter £800k towards a house so she can buy in London and is starting a family.

We could sell our house of course, but even giving £100k to our daughter is no where near going to help her buy a similar house to friend’s daughter.

Comparison is the thief of joy.

It sounds like you're in a pretty good position, I'd just focus on that.

Always there will be others more fortunate than you...
More importantly, the same is true that there will be others less fortunate than you...

London has been an economic power house for the last 20 years. If it was a country, its budget will be in 60% surplus so in effect it finances the rest of the country. Price are 10 times what they were in the late 90’s, just like your friend, many sellers had « modest » earnings all their life which explained why 2m pads have 30 years carpet and an old bathroom. At least, their daughter had the deposit given, it takes a while to save 800k even on good jobs

It sounds like you still buy into the myth that if you work hard enough you will achieve x,y,z. Hard work isn’t always enough, being deserving of good things isn’t always enough. Luck, chance and sometimes just being in the right place at the right time are some of the biggest determinants of outcome.
London property was always going to deliver a greater return. House prices very rarely go down in London, and then it’s never as much as the rest of the country.
You chose to stay up north. I’m sure there have been lots of benefits to that you’ve overlooked. Would you have wanted to have spent your working years in London? Raised your daughter there?

London is a huge place. Where did your friends buy?

House price inflation in some places has been insane

I'm not London but I am south east and our first house that we bought in 1997 is now five times the price.

My DH and I have benefitted from it massively but I am very aware it's not because of anything we have done.

When you feel like this, you need to consider the pros of living up north over London. I’m guessing that their area might have been a more up and coming area in 2006 for it to have quadrupled in price.

I’m currently watching a programme on tv about homelessness….you and your family are in an envious position compared to someone on the streets or in temporary accommodation or under threat of no fault eviction.
count you blessings and stop being envious of your friends….you made the choice, you have a home, just enjoy living there.

So much of this is luck based. It’s hard when you are so close to it.

You can only make the best decision based on the information you knew at the time. Obviously had you known that London prices were going to go that way you would have bought in London but there was no way you could have known. I have friends who bought in other cities/ suburbs that at the time were ‘up and coming’ but then a series of events lead to no more regeneration and the area never grew and they lost money when they sold.

I think it’s fine to say it’s annoying, it is and it drives inequality and stunts social mobility. Neither are good things. The profit made really needs to be taxed

That’s the thing about London. People are always horrified by the prices. But historically it has been an excellent place to make money on the property price increasing if you can just get onto the ladder.

You had the same choice that your friends had, go live in the North or to live in London. Everyone knows London house prices go up more than rest of UK. My ex colleague has 3 DD's. She gave them each £50k to help with deposits about 14 years ago. 1 bought in London, one in Stratford Upon Avon and one in Burnley. As you'd expect the London property has gone up in value the most and the one in Burnley not so much increase in value. Her DD's knew where they bought would affect the rises in their house prices.

Thankfully your daughter is more likely to make her life up north where she has friends, family and roots and where she can buy a family home for £370k.
The girl who grew up in London is more likely to want to stay there - but £370k won't even buy a 1 bed flat in many areas.

We moved from the south east to the south west and I’m sure our friends who stayed in the south east will retire with more money due to housing but my god it’s a miserable place where no one seems to smile. I’m happy where I chose to live.

It’s hardly fair to suggest the whole of the SE is miserable!

@Twiglets1 i didn’t say that, just where I grew up and where some of our old school friends live. Walking down the high street nobody smiles… it’s really weird. Everyone seems really stressed. There’s some beautiful places (still visit in laws there) but the general mood is one I’m happy to not be around even if financially I’m poorer.

You can never know what the market will do. Our friends have bought a flat in London ten years ago and sold it last year with a loss.

Your friends have been extraordinarily fortunate. That sort of gain, even in London, is exceptional and many times beyond what most London properties have achieved in that time. I would think of it almost as though they won the lottery - amazing and lifechanging for them, but not something you can compare your life to in any way.
Have to say, though, I'm intrigued about what they bought and where that has achieved that!

I'd also love to know where your friends bought that's had such a massive increase in value. We bought our house in SE London for £240k in 2006 and it's now worth about £500k. I can't think of any areas we could have afforded at the time that are now in the over a million price range.

I wouldn't want to inherit 800k. Removes any incentive for hard work.

NGL I'd really LOVE to have been gifted 800k and just do the bare minimum at work

If it's any consolation we bought our 1 bed London flat for £315k 7 years ago and sold for slightly less. Unfortunate timing on both ends for us, bought at the height of house prices and sold at the trough (thanks Liz Truss). But we weren't too gutted because we bought the flat to live in rather than as an investment, and we were able to buy a house we loved at a lower price than we would've expected it to go for, for the same reasons as our own sale.

I do get it though, a friend of mine bought their 2 bed London flat for around £350k a year or two after we bought our flat so property prices had dropped a little by then. They managed to sell for a much bigger mark up before the economy tanked and interest rates shot up, and were able to move to a house that was £700k+. It does feel like a gut punch that we didn't get such a good windfall just for buying and selling at slightly different times, but it really is just down to luck and we aren't bitter. Again our new house is a long term home so it was about where we were happy to live rather than chosen to be a nest egg.

Many people have done very well out of property through sheer luck & I know many that have property worth 1m plus however it’s quite unusual to give a dc 800k to buy a house even out of 1.6m so I wouldn’t compare. Very few dc in that position.

But historically it has been an excellent place to make money on the property price increasing if you can just get onto the ladder.

Its not a good thing though…

I’m also massively intrigued where your
friends bought to make such a profit without doing any work!

We bought and sold at similar times in an area of London that has seen above averaging price increases, and made nothing like that sort of money.