5 ms·

This has perplexed me as well. Here in the UK, the top 1% of incomes is £175K. Assuming the bank lets you borrow 5x, and you're married to someone with a more m

This has perplexed me as well. Here in the UK, the top 1% of incomes is £175K. Assuming the bank lets you borrow 5x, and you're married to someone with a more middling income, you can borrow ~£1M. Yet there's a ring around London where it's hard to see any family homes that are under £1M. I mean sure maybe they're sitting on equity or mom and dad are contributing, but by my estimation there are a huge number of people who have thrown absolutely everything into owning a home. We'll see how they fare if rates rise.

twic 5y ago
> there's a ring around London where it's hard to see any family homes that are under £1M If you mean the Stockbroker Belt [1], well, yes. [1] https://en.wikipedia.org/wiki/Stockbroker_Belt https://en.wikipedia.org/wiki/Stockbroker_Belt
sokoloff 5y ago
What's the top 3% of income of people who work in London? It's probably not "all of the UK" that matters as an income reference, but rather the people who are earning incomes and wanting to live in that area (plus all the people from around the world who would consider buying a house in/near London, but not 100 miles away from London).
- lordnacho 5y ago
  Yeah true, couldn't find London specific stats. Fair guess is that the lions share of UK to earners are based in London.
eli 5y ago
What's the top 1% for net worth though?
- pharmakom 5y ago
  The problem is it is becoming impossible to be self made. Most people buying real estate in south east of UK and London have middling salaries but substantial help from their parents. The working class kid who made it to 70k/year? Tough luck.
  - ipaddr 5y ago
    People already made their money in London. Buying a home there means buying into an expensive mature area. Most people buying come from old money or they are over leveraged or foreign sources. You should try to make some other city into something and buy into their future price increases.
newaccount74 5y ago
> there are a huge number of people who have thrown absolutely everything into owning a home I don't know what the situation is like in the UK, but here in Austria banks are really really eager to give people as much money as they'll take. Getting a mortage that runs 30 years? Sure thing! Why not make it 35 years? 60% of your paycheck goes into mortage? Why not? You have less than 10% of the required amount in cash? Who cares! The people who are buying homes right now are getting into massive debt, with variable interest rates. If interest rates rise, a lot of home owners won't be able to pay their mortages anymore, and they won't be able to sell because the only reason people can afford these crazy mortages is because the interest rates are so low. It looks like a bubble to me, and the only thing that's redeeming to me is that everyone has an interest in keeping the bubble going.
PaulDavisThe1st 5y ago
Hence the absurd govt-backed "buy-and-rent-to-buy" schemes that the UK has seen showing up over the last decade.
searchableguy 5y ago
London is one of the most popular places for people to whitewash their money via real estate. It doesn't seem surprising.
onlyrealcuzzo 5y ago
> We'll see how they fare if rates rise. They'll be fine. If asset prices go down, rates will go down.
philjohn 5y ago
And that's why I live in Rugby. Large 5 bed detached house in a quiet cul-de-sac, good sized garden, ample parking on the driveway for 4 cars if needed, and well under £1m. Train to London Euston takes 49 minutes and whilst the season ticket isn't cheap (nearly £10k) you're still coming out ahead with the lower cost of living.
leoedin 5y ago
I wouldn't underestimate the effect of equity - property prices in London have effectively doubled over the past decade, so there's a lot of people who bought a decade ago sitting on hundreds of £ks of unearned equity. The borrowing limits in the UK (4.5x salary) have quite a lot of headroom before interest rates make them completely unaffordable (assuming there's not a mass reduction in salary at the same time).

twic 5y ago

> there's a ring around London where it's hard to see any family homes that are under £1M If you mean the Stockbroker Belt [1], well, yes. [1] https://en.wikipedia.org/wiki/Stockbroker_Belt https://en.wikipedia.org/wiki/Stockbroker_Belt

sokoloff 5y ago

What's the top 3% of income of people who work in London? It's probably not "all of the UK" that matters as an income reference, but rather the people who are earning incomes and wanting to live in that area (plus all the people from around the world who would consider buying a house in/near London, but not 100 miles away from London).

lordnacho 5y ago
Yeah true, couldn't find London specific stats. Fair guess is that the lions share of UK to earners are based in London.

eli 5y ago

What's the top 1% for net worth though?

pharmakom 5y ago
The problem is it is becoming impossible to be self made. Most people buying real estate in south east of UK and London have middling salaries but substantial help from their parents. The working class kid who made it to 70k/year? Tough luck.
- ipaddr 5y ago
  People already made their money in London. Buying a home there means buying into an expensive mature area. Most people buying come from old money or they are over leveraged or foreign sources. You should try to make some other city into something and buy into their future price increases.

newaccount74 5y ago

> there are a huge number of people who have thrown absolutely everything into owning a home I don't know what the situation is like in the UK, but here in Austria banks are really really eager to give people as much money as they'll take. Getting a mortage that runs 30 years? Sure thing! Why not make it 35 years? 60% of your paycheck goes into mortage? Why not? You have less than 10% of the required amount in cash? Who cares! The people who are buying homes right now are getting into massive debt, with variable interest rates. If interest rates rise, a lot of home owners won't be able to pay their mortages anymore, and they won't be able to sell because the only reason people can afford these crazy mortages is because the interest rates are so low. It looks like a bubble to me, and the only thing that's redeeming to me is that everyone has an interest in keeping the bubble going.

PaulDavisThe1st 5y ago

Hence the absurd govt-backed "buy-and-rent-to-buy" schemes that the UK has seen showing up over the last decade.

searchableguy 5y ago

London is one of the most popular places for people to whitewash their money via real estate. It doesn't seem surprising.

onlyrealcuzzo 5y ago

> We'll see how they fare if rates rise. They'll be fine. If asset prices go down, rates will go down.

philjohn 5y ago

And that's why I live in Rugby. Large 5 bed detached house in a quiet cul-de-sac, good sized garden, ample parking on the driveway for 4 cars if needed, and well under £1m. Train to London Euston takes 49 minutes and whilst the season ticket isn't cheap (nearly £10k) you're still coming out ahead with the lower cost of living.

leoedin 5y ago

I wouldn't underestimate the effect of equity - property prices in London have effectively doubled over the past decade, so there's a lot of people who bought a decade ago sitting on hundreds of £ks of unearned equity. The borrowing limits in the UK (4.5x salary) have quite a lot of headroom before interest rates make them completely unaffordable (assuming there's not a mass reduction in salary at the same time).