How do people afford expensive houses

Derboy

pinkteapot wrote: »

They don't. There's been a massive increase in people leasing cars instead of buying, which is a large part of the reason you see so many more Audis/BMWs/Mercs on the road now. Figures in Sept said that 80% of Mercedes sales are now via PCP (a form of lease, though with an option to buy at the end of it).

With leasing, it's often cheaper (per month) to get a premium brand than a Ford/Vauxhall because resale value after 3-4 years is a lot higher, and the lease cost is based on the difference between new price and resale price.

A little while ago, I did the maths on buying a brand new car and selling it after a few years, vs lease/PCP etc. The cost over 4 years is virtually identical, so there's nothing really to choose between buying and leasing over that period.

However, the boom in the lease industry has in part come about thanks to low interest rates. Will be interesting to see what happens as rates rise again.

Spot on. If it appreciates, buy it. If it depreciates, lease it. Been leasing cars for years now. No point buying one unless you plan to keep it for a very long time.

chelseablue

Derboy wrote: »

Spot on. If it appreciates, buy it. If it depreciates, lease it. Been leasing cars for years now. No point buying one unless you plan to keep it for a very long time.

We're getting a lease car at the end of the month.


Will cost £125 a month, which is cheaper than buying one.


My other half was in a car accident and his car was written off. Insurance company paid out £850 for it (was a 15 year old Toyota)


So we're using the £850 as a deposit on the lease car.
Was either that or spend £1,000 on another old car that may not last long

Ithaca

Berger_3 wrote: »

Thinking about it more, the question for me is not so much how people afford expensive houses, but more so expensive cars. there are so many factors with houses, but with cars I personally have never spent more than £5k-£10k on a second hand car and have never bought new. Some people drive around in cars costing £40-£50k and you wonder how they can both afford it and justify it.

A lot of the time they will be company cars where they'll be paid an allowance each month.

Our town has a lot of Jaguar Landrover employees so we're awash with 65-plate Evoques and Discoveries. I'm mates with a married couple of JLR middle-managers who have his'n'hers Range Rover Sports which would normally be far outside their budget, and up to recently they would swap them out at least once a year.

You can lease a brand-new Audi A8 for around £500/month which is easily achievable.

Dan-Dan

mortgageFTB wrote: »

Hard work and luck for me. I bought my first house last year @£350k, and it was because of hard work and also a lot of luck (started in a early stage startup with equity, which got acquired and then the company IPO'd a couple of years later)..

https://www.youtube.com/watch?v=Ocdq4oIjHUk

GDB2222

Derboy wrote: »

Spot on. If it appreciates, buy it. If it depreciates, lease it. Been leasing cars for years now. No point buying one unless you plan to keep it for a very long time.

To put this in perspective, I bought my car in 2009. It was then 3 years old, just off lease. It's now (obviously) coming up for 10 years old, and I expect to keep it for as long as possible. I paid one-third of the new price when I bought it, and I have had no significant repairs since then. The only things that spring to mind are a new battery and new tyres.

makeyourdaddyproud

What about 35 yo+ cars? Will they forever appreciate?

Say I bought a Escort Mk2 and rented that back to my company. Not only is the asset appreciating, I get all maint costs paid. Hmmmmmmmmm....

A quick search on some 35 yo+ cars shows some costing as much as new cars?

And there's no tax to pay...

gregsayer

makeyourdaddyproud wrote: »

What about 35 yo+ cars? Will they forever appreciate?

Say I bought a Escort Mk2 and rented that back to my company. Not only is the asset appreciating, I get all maint costs paid. Hmmmmmmmmm....

A quick search on some 35 yo+ cars shows some costing as much as new cars?

And there's no tax to pay...

only on specific desirable models.
certain ford RS models from the 80's are now worth £30k +

ianthy

I think many posters have hit the nail on the head;-

• Progress up the career ladder – but no need to actually become the Chief Exec
• Live within your means
• Buy when the market is low and sell when the market is high
• Stay in a property long enough to gain equity

I purchased my first flat on my own in 1988 age 25, a flat in Barking, East London for £53,500 with a deposit of £3,500 saved in 6 months. Prices quickly grew but then a recession happened and also one of the proposed channel tunnel routes blighted the area. I met OH and we moved in 1996 from the flat, which was then valued at £29,500. I had negative equity and decided to rent the flat out. I later sold the flat in 2003 for £134,000.
In 1996, using the money that we should have used to clear the negative equity on the flat, we bought a modest 3 bedroom terraced house in Highgate, North London £155,000. We stayed for 3+ years and moved in 2000 to a larger house in Highgate. At the time borrowing was much easier and included bonuses. So we were able to keep both houses in Highgate with the 3 bedroom house as a BTL. The larger house – a student house requiring modernisation was purchased for £500k, which was £200k below the depressed market value. We still live in this house, now valued at £2+m and plan to downsize in 2018 back down to the 3 bedroom property, which is now valued at £1.4m. We are age 54.

We have not done anything clever, just moved/purchased when the market was low and taken advantage of good lending rates.

Barter

When my daughter was at university back in the 1990's, there were a number of students whose parents lived in very expensive houses and drove flashy cars. She was bewildered to find that they were on full LA grants. I asked her what the parents did for a living. Self employed. I drew my own conclusions...

vandiola

Either you need to have bought property back in the 60s-70s-80s and built up equity to buy a more expensive home now, or have a well paying job. I work in the nursing field, and most consultants I know are married to other consultants and most likely have a combined annual income of 6 figures. I imagine most will live in homes well over £500,000. A lot of nursing managers I know who are on the higher salary end are also likely to own homes around the £400,000 figure, even though in London that won't go very far. Me and a lot of my nursing friends are still single and at the bottom end of the nursing pay, we just about get by on our salary, forget about saving for a deposit!