Average house worth more than £500,000 ten times average London wage
Britain’s house prices are continually rising but Londoners have it the worst.
Not only is the average house worth more than £500,000, according to the Office for National Statistics, but people’s salaries are not rising fast enough to keep up with property price inflation.
The average Londoner’s salary is only just above £30,000. In fact, wage growth is a huge problem for the whole of Europe.
HSBC released a huge chartbook this week detailing the state of the UK housing market.
And nestled within the report are some key charts that show how London’s property market is at near-breaking point because homes are becoming unaffordable for the average worker.
Britain suffers from a dearth in housing supply and developers are just not building enough houses to sate demand.
Meagre supply means house prices continue to soar, even though there was a credit crisis in 2007/2008. Fundamentally, people still need a place to live and owning your own home is a priority for most Britons.
But London has it the worst. The average house price in London is well over £500,000, according to the Office for National Statistics, and continues to lead the charts in house price growth. In this table, the East may have had higher property price growth over the last year, but home prices are lower compared to London by at least £200,000.
So, even though more people are putting houses in the market in Britain’s capital, it does not make a huge difference to the average Londoner because they cannot afford to buy a property anyway.
After all, if you are not on the property ladder already, getting on it is incredibly difficult. This is because house prices are more than 10 times the average salary.
People are taking on a lot more debt in order to get on the housing ladder.
With UK interest rates at record low since 2009, this has made borrowing cheaper. So really, people are getting on the housing ladder because they are taking on so much debt.
If you cannot afford to buy a property, you turn to renting. But because of the growing cost of housing, the rental market is extremely high in London — more than double the UK average. So unless Londoners suddenly all get one huge pay rise or a windfall in cash, it looks like living in the capital is going to become near impossible.