Housing Costs 🤢
We had some friends over last night. It was the first time they were meeting my baby daughter, and it was a great chance for us to also see their young son again who is growing like a beanstalk!
We got chatting about the cost of housing in London.
We’re both in a similar situation - two-working-parent households with a young child at home, living in a flat with a strong desire for a bit more space. FWIW, both Josh (the husband/Dad) and I come from pretty straightforward backgrounds - read: no rich parents.
We are lucky to be HENRYs, but the NRY bit really bites when it comes to housing. A 3-bedroom terraced house in either of our current neighbourhoods would cost in the region of £1.5m.
£1.5m!
What an absolutely enormous sum of money for something relatively reasonable in terms of life aspirations. It’s not a yacht, or a ski chalet, or a fancy car: simply a small-ish home to raise a family.
At that level, you either have to have an enormous deposit, an enormous mortgage, or both. Assuming a 30-year mortgage at 4% interest, you have two equally ugly choices:
- 20% deposit: £300k deposit + £94k stamp duty + £10k legal fees + £5k moving fees = cash need of well north of £400k, and then a £5.7k/month mortgage (before council tax, bills, etc.); OR
- 50% deposit: £750k deposit + £94k stamp duty + £10k legal fees + £5k moving fees = cash need touching £900k (!), then a £3.4k/month mortgage (before council tax, bills, etc.)
Suffice to say neither of those are obtainable and so we have a limited set of choices. Stay put, in our small flats, and try to raise growing families here. Rent, and know we are not making any progress towards savings goals or retirement backups. Or move out of London, and spend hours per day commuting.
I don’t understand how this can be sustainable. When cities become unliveably expensive, they must surely be on a gradual slope of decline.
I hope London doesn’t end up that way.