How do people afford expensive houses

onlyroz

GDB2222 wrote: »

£400k in Hendon (a suburb of London) will just about get you a two bed flat.

It'll get you 3/4 bedrooms in SW15:

http://www.rightmove.co.uk/property-for-sale/property-56037746.html

http://www.rightmove.co.uk/property-for-sale/property-52983370.html

http://www.rightmove.co.uk/property-for-sale/property-40430370.html

http://www.rightmove.co.uk/property-for-sale/property-36655314.html

ThePants999

SG27 wrote: »

You havent turned 10k into 160k because you can never realise it. Unless you sell up and move back with your dad.

Or sell up and rent. You're right that we won't realise this value as cash any time soon, but it's there for equity release later in life if we so desire, or paying for care in old age, or inheritance, so it's far from irrelevant.

SG27 wrote: »

House price growth makes it harder to move up. If prices stayed the same your current house would have cost around £224k. You would have needed to save £10,200 to make the new 10% deposit. (Not a problem if you can afford the extra 170k mortgage!) Then you only need to increase your mortgage by about £104k rather than £170k!

This is all true, but the question in the OP was "how people ever afford to buy houses say more than £400k", and in our case the answer was "buy when it was worth less than that, and wait". If house prices had stayed the same, we'd be in an even nicer house by now, sure - but they didn't, and if we were trying to enter the housing market now, we couldn't afford £400K. Not particularly helpful to the OP but there it is...

FWIW, house price inflation has both helped and harmed us, as there are two aspects to what we can afford - deposit and loan size. Initially we were limited by deposit, so our flat going from £100K to £120K helped us more than it harmed us, as although that meant a £200K house went to £240K, it unlocked much the rest of our borrowing potential by giving us a bigger deposit. In terms of our next step, though, the house going from £280K to £410K is a bad thing, as we can't borrow more, so what we'd need to save to move up has increased. Swings and roundabouts.

Rosemary7391

ThePants999 wrote: »

FWIW, house price inflation has both helped and harmed us, as there are two aspects to what we can afford - deposit and loan size.

I think this is a good way of splitting up the different problems. Skimping and saving won't increase the amount you can borrow. If you can earn enough to support a £360k mortgage, the £40k required deposit is unlikely to be a problem as it's less than a years salary. When you're looking at needing to put up a £220k deposit on that same house because the bank will only lend you £180k on your salary, you've a bit of a mountain to climb...

I say only £180k. That's still twice the value of my nice flat in Scotland!

silvercar

The differing HPI that has hit the south-east more than other parts of the country effects mobility.

With aging relatives still up north and all their offspring down south, they don't have the option to sell up and move nearer to their kids. Had the situation been reversed they could retire, sell their house, buy a decent bungalow and have enough money to fund a generous retirement.

onlyroz

silvercar wrote: »

The differing HPI that has hit the south-east more than other parts of the country effects mobility.

With aging relatives still up north and all their offspring down south, they don't have the option to sell up and move nearer to their kids. Had the situation been reversed they could retire, sell their house, buy a decent bungalow and have enough money to fund a generous retirement.

My parents sold their 6-bedroom detached house oop-north and bought a 3-bed semi down here for the same money - so it can be done if you're downsizing, but I imagine that it will rankle having to do this.

GDB2222

onlyroz wrote: »

It'll get you 3/4 bedrooms in SW15:

http://www.rightmove.co.uk/property-for-sale/property-56037746.html

http://www.rightmove.co.uk/property-for-sale/property-52983370.html

http://www.rightmove.co.uk/property-for-sale/property-40430370.html

http://www.rightmove.co.uk/property-for-sale/property-36655314.html

One of those looks like a POW camp! They must have crime issues.

I perhaps should have said that if you go for some of the local authority flats in Hendon you can get two bedrooms for under £300k. You can also pay up to £800k for a 2 bed flat on a gated estate. £400k is an average sort of price for a decent flat, comparable to the property in Cardiff, but much smaller.

sevenonine

I salute all you houseproud homeowners for your gallant efforts to save and profit from prudent spending/economising.

I bought in the 1970s in SW London, emigrated to Australia in the 1980s, let my flat in NW London, returned to England when I retired from working in Sydney, just as the property prices in Australia were going up; sold my property there and bought a house in SWLondon. Now trying to downsize but to buy in SWLondon costs as much as my house is worth - around 500K.

Now at a loss where to go as I don't want to buy leasehold for all its complications and maintenance charges. Being free from a mortgage, I am only responsible for my outgoings on utilities, so a comfortable balance in savings but not earning much in interest.

Like most of you, I saved hard, made my own clothes, enjoyed holidays abroad - travelled mostly in SE Asia while working in Australia - bought when I could afford.

I suppose you have to take charge of your own life but I have to say, looking at my nearest neighbours (Brazilians) who arrived about the same time as me in my current house (2007) and who rent their house,
they have no visible means of employment (sublet rooms) yet run cars and live lavishly!

ScorpiondeRooftrouser

clint_S wrote: »

Just searched Rightmove for Cardiff £400K, first to pop up was a 6 bedroom detached house.


http://www.rightmove.co.uk/property-for-sale/property-57799385.html


Manchester has this 5 bedroom semidetached first on the list
http://www.rightmove.co.uk/property-for-sale/property-57799385.html


Cities are more expensive but London just seems silly when you look elsewhere.

Yes, and that is NOTHING like the house in Newcastle Emlyn for the same price.

Of course you can get a decent house in Cardiff for 400K, I never said you couldn't. That house is way less nice than the Newcastle Emlyn house.

It amazes me that fools thanked your post as though you had said something clever.

questionss

SG27 wrote: »

A lot of people extending themselves now will be in a lot of trouble when they rise. Be that next year or 5 years.

Alternatively there are lots of people like us using the opportunity of the current low interest rates to overlay their mortgages and maximising equity as a form of saving.
We've cleared 2 mortgages since 2007; we plan to move imminently and we hope to repay this mortgage within 7yrs if BOE rate stays below 1.5% so it's got a bit to increase. We're taking a flexible lifetime fracker mortgage over 25yrs. We plan for our overpayments to be used to decrease the contractual payment rather than the term so that if rates rise above that we have a good buffer available.

Berger_3

The BOE have made it clear that the new "normal" for interest rates will be some way lower than previous "normal" levels - somewhere around 2.5%. Its going to take a while to get back to these levels once the start to rise, which could still be a year from now. People who are overstitching themselves now should at least have an abundance of time to do something about it. if you are on something like a 5 year fix, even if you are overstitching yourself now you've got to hope an assume that your wages will rise accordingly, and as perviously stated have plenty of warning.