The chances of would-be buyers in London getting a foothold on the housing ladder remain slim, mainly due to high property prices and a lack of affordability in the capital.
The gap between income and house prices has sky-rocketed across most regions of the UK in recent years, with the situation most acute in the capital, where the average home now costs around 12 times the average London income, which largely explains why many would-be buyers are being priced out of the market in parts of the country, especially in London.
The issue has been highlighted by new research from residential crowdfunding platform Property Partner which claims that it would take 121 years for the average salaried Londoner, earning an average of £34,320 a year, to save up a deposit for the average priced flat in the capital, which now costs more than £457,000.
Based on average earnings and home prices in London, the deposit needed to buy the property, assuming the first-time-buyer secured a mortgage of four times the average London salary, would be £320,505.
Unsurprisingly, the study found that many workers in the city are priced out of the housing market across all 33 boroughs, including City of London, with those who are not already on the property ladder – and have no help from the bank of mum and dad – facing an almost impossible task of ever owning a home in the capital.
Even in Barking and Dagenham, which is the most affordable borough, a first-time buyer earning the average London salary would still need to wait 31 years to buy their first property.
In Kensington and Chelsea, it would take 389 years to save a deposit for an average flat in the borough.
Dan Gandesha, CEO and founder of Property Partner, said: “It’s staggering that if you have no help from family or friends, and you hope to buy on your own, it’s now almost impossible to afford anywhere in London. Even in the ten most affordable boroughs you’d need to be saving an ambitious 20% of your net annual salary to stand a chance of getting the deposit together before you reached middle age.”
“The British obsession with owning their own home is now for many, at least in London, a pipe dream,” he added.
Of course, individual circumstances differ, but this study does remind us that private landlords play a vital role in providing accommodation for a growing number of people, including those who cannot afford to buy their own homes.
Gandesha continued: “In Germany, long-term renting is generally accepted and the cohort of long-term renters in the UK is growing, by force of circumstance.
“Build-to-rent is one of many ideas to help solve the UK’s housing crisis, and the quicker we can provide good quality, professionally managed homes, for both the public and private lettings sector, the better.”