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Frugal Git

I Have 6 Grand In Savings And Earn 20 Something K. Can I Buy A London Home By 2025?

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http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/12029161/Ive-got-6k-earn-27k-and-want-to-buy-a-London-home-by-2025.-Do-I-stand-a-chance.html

Genuinely brilliant trolling from the Telegraph.

'She will need to be earning 163k p/a to achieve this, given the strong growth likely in London house prices.'.

Aspirational britain today.

Edited by Frugal Git

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From the money left over she puts £200 into her cash Isa, and her savings have grown to around £6,000.

Oh look, she has £200 to save every month. How convenient, with the HTB ISA starting this month and allowing a maximum of £200 to be paid in every month! :rolleyes:

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Of course she will. In ten years, she likely to meet someone rich in London, working in finance, marry them, and a house is partly yours!

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Of course she will. In ten years, she likely to meet someone rich in London, working in finance, marry them, and a house is partly yours!

There are about 20 million people living in London and its commuter belt, of those around 200 thousand work in the City i.e. 1% of the population. Hardly "likely".

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Of course she will. In ten years, she likely to meet someone rich in London, working in finance, marry them, and a house is partly yours!

Then she can divorce him, and the house is wholly hers! Result!

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This is the result of trying to do the right thing in life.

Yeah. I like the article because it is a relatively deadpan take on the problem and shows just how ridiculous the situation has become. Here we have a young woman earning a reasonable professional starting salary who is not pissing all of her money away, and saving what she can. She aspires to a 2 bed flat in Streatham and it is quite clear that she will never, ever be able to afford one, even by the time she hits 40.

What the article doesn't comment on is that 2 bed flats are suitable for people of her current age and situation. Give it another 10 years and she will likely need a family home which will be even more out of reach.

Why more of this generation aren't doing these sums and realising the utter futility of trying to make a life in London, I don't know. They just should leave now.

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"Miss Thomas is very risk averse and is not prepared to invest her savings in anything that doesn’t provide a guaranteed return."

Yet her whole strategy is to take a massively levered investment in a single overvalued asset class. :)

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You could re-print that word for word in The Daily Mash as satire.

I've posted this before, so apologies, but when I was a trainee accountant myself 1999-2002 one of the partners suggested that the fact that newly qualified managers in the London office couldn't buy property was evidence of a bubble. That was probably 2001-ish. Looking at the Land Registry the index for Greater London in June 2001 was 209. It's 547 today. That's equivalent to compounding at 7% for 14 years. Wages have not grown at at rate at any point during the same period.

And yet one of the sources suggests that house prices will continue to grow at 5% per annum for the next nine years.

Taking 2001 as the baseline, that gives house prices compounding at about 6% over the 23 year period to 2024 when the accountant's salary reaches £168k so she can buy a 2-bed in Balham. :rolleyes:

It's the compounding. If wages compound at 3% for 23 years from 2001 to 2024, they almost double. If over the same period house prices compound at 6% they increase by a little shy of a factor of 4. And we wonder why home-ownership rates are falling in younger cohorts and entertain BS narratives about younger cohorts wanting flexibility and blowing the deposit on i-phones. Other explanatory frameworks exist and should be considered. I'd say that if you double the price of something relative to earnings, the major explanation of people buying less of it would be that it became too expensive, but what do I know.

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Love the article and agree that reading it felt just like reading the Daily Mash - reality is really getting very close to parody.

Sad thing is that the rent she pays looks quite low for London, and if she wanted to live on her own she wouldn't be able to afford the rent even if she stops saving. At least one upside is that as accountant she should be able to find a job outside London.

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