What's it like to be a 'homillionaire'?
02-04-2015
House made of money Photo: Alamy
As a report from Savills suggests 400,000 Britons own homes worth more than £1 million, Harry Wallop explains how he has ended up living in a house worth quite so much...
By Harry Wallop
"Are you a millionaire, Daddy?” asked the 7-year-old, out of the blue over breakfast.
“Of course, not,” I spluttered, and was about to explain that a career in journalism is a fast-track to impoverishment.
“Well, Rosie says you are a millionaire and we live in a million-pound house,” she said, matter of factly. It turns out the British obsession over property prices has become so endemic, it has trickled down to the playgrounds of north London.
I had to explain the difference between assets and income. And that Rosie’s parents probably lived in a million-pound house, too, and for that matter a significant number of her friends at school, an unremarkable Catholic primary in north London. But by this point, she had returned to her Weetabix.
Such has been the absurd house price inflation in the capital, especially within certain boroughs, it is hard to live in a family-sized home and not be sitting on an asset of over a million.
“For the people around here, it’s simply just a figure,” says Simon Hardie, of John D Wood estate agents in Clapham, south London. “You can’t find a house for less than £1 million. Anything less than that will be a flat.”
In some parts of London, it’s flats, too. There is a currently a one-bed flat for sale in St John’s Wood for £1 million, with a kitchen the size of some kitchen tables.
According to the Land Registry, the average property price in London is £464,000. In Islington (my borough), it is £665,000 – that includes all the damp one-bed bedsits as well as the lovely Georgian villas.
Homillionaires - nearly 400,000 of them
It, therefore, did not come as a large surprise to discover that 399,000 Britons are now “homillionaires”, owners of properties worth £1 million or more. The horrid neologism, dreamt up by the estate agent Savills, which conducted the research, is a new word for an age-old quirk of the British property market: that it has created enormous asset wealth for consumers, many of whom may not earn all that much. Bricks rich, cash poor, if you like.
At this point, I should declare that I, like many, only got onto the housing ladder thanks to an inheritance from a grandmother, who managed to die fortuitously both during a property downturn and just as I was leaving university.
I was given £210,000 in 1998. I invested it all in a two-bed flat in Islington – an astonishing slice of luck, handed to me on a silver salver. It was always a source of some embarrassment that, on a trainee journalist’s salary, I was able to live in a rather nice maisonette near Angel. I would shuffle awkwardly when colleagues asked suspiciously if I rented or owned the place.
My wife and I sold that flat when we had our first child, to buy a four-bed house on the other side of Islington, with a patio and nice cornicing, for £450,000. The week Lehman Brothers collapsed, we traded up again to a five-bed house in a less salubrious part of Islington, but with a garden large enough in which to kick a football and grow some tomatoes. We paid £840,000.
Harry Wallop trying not to look smug in his £1 million Islington house
A combination of the lowest interest rates in 300 years, a very generous inheritance, lucky timing and a bit of judicious trading-up means I now live in a property comfortably over £1 million. True, the bank owns a chunk of it, but the minority share.
I still feel embarrassed enough to joke about the crack den across the road when people raise their eyebrows as they cross the threshold. And I am aware that some of my wife’s cousins living in Cumbria, already scornful of my cushy start to life, are incredulous that the lunacy of London property prices heaps yet more good fortune on our heads. A hard-working sister-in-law in Manchester bought a property at the same time – and has only just left negative equity, while prices in our local area seem impervious to hard economics.
As each month marches on, across the country, the £1 million home becomes less and less of an exception. Plenty of homeowners – even those without a wealthy grandparent – find themselves in a similar situation as me.
If you bought in the mid-1990s in London...
“I was sorting out my will this week, and I realised we have an estate of over £2 million, with most of that being the house,” says Jo Dickinson, 41, a part-time accountant, who lives in north London. “It is just bonkers.” An £80,000 flat bought in the mid-1990s has been transformed through a series of trade-ups into serious wealth – on paper.
She and her husband, an investment banker, bought their four-bed home for £550,000 ten years ago. It is now worth about £1.7 million. “It is just ridiculous. I didn’t have enough money in the current account to pay for some easyJet flights to Barcelona, but we live in a house worth silly sums of money. I am not sure my mother can get her head around this discrepancy.”
She says her mother, who lives in Derby, is happy for her good luck. “My mother just thinks London is a completely different country.”
Most property millionaires in London have benefited not just from the most recent boom in house prices (up 16 per cent during 2014), but a series of booms over the last 40 years and more.
John King, a fellow of the Royal Institution of Chartered Surveyors, and based in Wimbledon, says: “When I started in 1970, to break the £5,000 barrier was a real achievement. These same houses are now selling for £1.1 million.”
He believes that most London property millionaires have learned to get over any awkwardness about their asset wealth. “Who could afford to buy the houses we currently live in if we were to start again now? Very few of us. Most people know it’s just luck and timing.”
In the 1980s, the average house price was three times the average annual wage. It is now more than six times - 9.1 times in London - making it ever more difficult for the children of property millionaires to even get on the ladder – unless their parents sell up and hand over the proceeds.
125,000 'homillionaires' outside of London
London has quirks of its own, particularly an influx of wealthy foreign workers. But this is starting to affect not just boroughs beyond Kensington and Westminster, but areas outside of London. Of the 399,000 property millionaires, 125,000 are estimated to be outside the capital.
James Toogood, who runs the Bristol office of Knight Frank, the estate agency, says that sales of “prime residential” (properties worth over about £1.5 million) have quadrupled in the last year in the city. “I am amazed at the people who can now afford over £1 million. But we’ve seen a big increase of people moving out of London and the south east, and quite a few come with a big slug of equity.”
Sally Bradborn, 38, a ceramic artist is married to a lawyer and has three young children. She is currently selling her Bristol home, bought in 2009 for about £730,000, for more than £1 million. It is quite a large property, with four bedrooms and a separate granny flat, occupied by her mother-in-law (who chipped in to help them buy the place). They are using the proceeds to buy another Bristol property – with a bit more outside space. “It is a bit unreal. Embarrassment, more than anything, is the sensation of owning a £1 million home. We have to play it down. But now it’s on the market, we can’t really hide it.
“My sister, bought a 20-acre farm on Exmoor for half this price. She is staggered. She just thinks it is absolute madness to buy a fairly ordinary house for a million.”
But don’t feel sorry for those of us who bought in the right postcode: we have other things to worry about – not least how our children will ever get on the housing ladder.