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Tough times for first-time home buyers

Posted on 02 February 2017

Thought January was tough? Try saving £2,300 a month until 2021 for a house deposit

House prices have become so expensive in the capital that buyers hoping to save for a typical deposit over the next four years will need to scrape together at least a staggering £2,300 every month1, a new report from the National Housing Federation reveals today.

According to the London Home Truths 2016/17 report, a 20% deposit on an average house in the capital has now soared to around £113,000 – putting home ownership completely beyond reach for the many desperate to step foot on the property ladder.

Despite having the highest average salary in the country (£34,000), earnings in the capital have failed to keep up with the merciless increases in house prices. The average London house price (£563,041) is now double the national average and an unprecedented 16.6 times more than the typical salary.

This means that a household currently needs an income of almost £130,000 a year to afford an average mortgage at 80% of the value of a typical house.

The report paints an equally bleak picture for private renters, too, as the average monthly rent (£1,727) now swallows an eye-watering 61% of a typical salary.

But having a job in the capital is not always enough for some, with more and more working people in London turning to benefits to help make ends meet.

Over a third of all Housing Benefit claimants in London are in work, higher than any other region in England, highlighting the desperate challenge of meeting the costs of skyrocketing rents and house prices.

Home ownership is furthest out of reach in Kensington and Chelsea, where average houses cost close to 35 times local salaries.

Home Truths 2016/17 reveals the most and least expensive places to buy a home in the region:

Five most expensive areas to buy in London

Area

Mean house price

Mean salary

How many times house prices are average salaries

Kensington and Chelsea

£1,962,710

£56,462

34.8

Westminster

£1,385,014

£43,472

31.9

Camden

£1,092,476

£40,201

27.2

Hammersmith and Fulham

£944,458

£42,411

22.3

City of London

£937,289

£54,023

17.3

Five least expensive areas to buy in London

Area

Mean house price

Mean salary

How many times house prices are average salaries

Barking and Dagenham

£254,183

£25,111

10.1

Bexley

£306,396

£31,096

9.9

Havering

£329,615

£32,874

10

Newham

£330,968

£25,730

12.9

Croydon

£351,970

£29,650

11.9

The housing association sector is working to battle the capital’s housing crisis, completing over 11,000 new homes during 2015/16. This was nearly half of all new homes in London for that period.

In total, housing associations built more than 40,000 homes across the country in 2015/16 – 29% of all new homes in England. Housing associations have ambitions to work with Government to build thousands more new homes across the country.

Mairead Carroll, the National Housing Federation’s External Affairs Manager for London, said:

"When it comes to the housing crisis, London is in a different world to the rest of England. For too long, not nearly enough affordable homes have been built.

"But housing associations in London are buoyed by increased funding and flexibility from Government and we are now seen as the key players in ramping up the supply of new homes.

"We want to work with the Mayor to end this housing crisis and have clear ambitions to deliver the affordable homes this city so desperately needs."

 1Illustrative example based on current levels for both average salaries and house prices in London

For more information read the full report Home Truths 2016/17: The housing marketing in the London. 

The National Housing Federation is the voice of affordable housing in England. We believe that everyone should have the home they need at a price they can afford. That’s why we represent the work of housing associations and campaign for better housing. For more information visit housing.org.uk

 

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