You guessed it, folks. I’m back again to talk about money. And most specifically: how much of it you’ll need if you want to stand even the slightest chance of managing to clamber your way onto the capital’s property ladder. Nationwide has recently released this year’s Affordability Report; a run-down of all things – well… affordability.
Looking at the average property prices for first-time buyers and the average full-time earnings across the country, Nationwide created a handy (if a little horrifying) list of the UK’s most and least affordable spots to buy a home. And long story short – London is outrageously expensive. But when have I ever given you the condensed version of a story, hey? So, grab yourself a cuppa and listen up.
London is the UK’s least affordable place for first-time buyers
Despite London seeing the largest rise in affordability last year, the capital city remains the least affordable place to buy your first home. And not necessarily for the reason you might think. Whilst, of course, London’s astronomical house prices play a part in its (lack of) affordability; deposit costs and the average house price to earnings ratio (HPER) are also to blame. Last year, whilst London saw a drop in house prices and a rise in average salaries, the average HPER in the capital remains significantly higher than anywhere else in the UK at 7.5.
Deposit-wise, the report revealed that the average first-time buyer in London has to put down a £44,800 deposit. The national average deposit is just £23,000, but a 10% deposit equates to over £40,000 in 26 of London’s 32 boroughs. And whilst, of course, the average wage in London is around 45% higher than the national average salary, the report detailed that first-time buyers in the capital are spending over 50% of their earnings on their mortgage.
It goes without saying that affordability varies drastically throughout London. In fact, the Big Smoke boasts the biggest difference between its most and least affordable areas. Kensington and Chelsea was revealed as the capital’s least affordable area, with a HPER of (a rather eye-watering) 13.9. On the other hand, Bromley was hailed London’s most affordable area, with a HPER of just 6.2.
It’s not all drab and dreary, though. Islington, City of London, Wandsworth, Hammersmith and Fulham, and Barnet all saw a drop in their HPER, meaning that London is getting more affordable. It’s just still a whole lot pricier than anywhere else in the country.
If you’re in the mood for a bit of self-torture, you can read Nationwide’s full affordability report here and the local area affordability report here. But be warned: both are pretty bleak for us Londoners that are hoping to snap up a gaff any time soon.
