House prices have outstripped earnings in every London borough over the past decade, research has revealed, with homes in some parts of the capital becoming twice as difficult for average workers to afford.
The ratio of typical property value to median salary increased in all areas of the city between 2013 and the end of last year as house price growth outstripped wage growth across the board.
But homes in some boroughs becoming twice as difficult for local people to afford.
Barking and Dagenham has seen housing affordability plummet the most, with median salaries dropping in the last decade as average house prices more than doubled, from just over £180,000 to £375,000.
This means a typical resident of the east London district required 11.8 times their salary to buy a home last year, up from 5.6 times a decade earlier, according to the report by broker-matching service Online Mortgage Advisor, which looked at figures published by the Office for National Statistics.With few lenders offering mortgages of more than five times salary, the scale of deposit required would be so high as to price the vast majority of average locals out of the market.
The London boroughs where affordability has fallen fastest
Borough |
House price : salary ratio 2013 |
House price : salary ratio 2022 |
Increase in unaffordablity |
Barking and Dagenham |
5.6 |
11.8 |
111% |
Hillingdon |
7.6 |
14.2 |
87% |
Havering |
7.8 |
13.3 |
71% |
Redbridge |
8.8 |
14.5 |
64% |
Sutton |
8.3 |
12.8 |
54% |
Source: Online Mortgage Advisor analysis of ONS data
Across the capital, Kensington and Chelsea saw the largest pure rise in unaffordability over the decade, with the property price to salary ratio soaring by 6.8 points to a staggering 38.1 last year, according to the report.
With the typical house price in the desirable west London borough standing at £1.4 million at the end of 2022, and average salaries at just £36,468, a local couple couldexpect to need a deposit of several hundred thousand pounds to buy there.
Brent in north London had the smallest change in affordability over the decade, the report found, but residents still typically required 13.4 times their salary to purchase a home in 2022, up from a multiple of 12.4 in 2013.
Only Tower Hamlets had a property value to earnings ratio below 10 in the latest data, with a house price to earnings ratio of 9.6 for a solo buyer.
The London boroughs with the biggest affordability gaps
Borough |
Average house price 2022 |
Average salary 2022 |
House price : salary ratio |
Kensington and Chelsea |
£1,390,000 |
£36,468 |
38.1 |
Westminster |
£975,000 |
£45,135 |
21.6 |
Richmond |
£752,000 |
£37,041 |
20.3 |
Hammersmith and Fulham |
£757,250 |
£40,020 |
18.9 |
Wandsworth |
£685,000 |
£36,696 |
18.7 |
Source: Online Mortgage Advisor analysis of ONS data
Online Mortgage Adviser managing director Pete Mugleston said reduced stamp duty rates during the Covid lockdown period, and a scramble to complete transactions before interest rates rose, had led to renewed house price growth in 2022 following steady recovery from the global financial crisis over the prior decade.
Aneisha Beveridge, head of research at estate agents Hamptons, said London property values had risen more quickly than other parts of the country since 2009.
"Price growth was initially led by prime neighbourhoods, but cheaper corners of the capital have been playing catch-up," she said.
Although house prices have begun to fall in the capital, affordability is continuing to take a hammering from high interest rates and constrained budgets due to the high cost of living.
“The fact that property prices have risen faster than people’s incomes has put homeownership out of reach for many renters living in the capital," said Beveridge.
"The need to save up for a significant deposit and meet the stress testing required for a mortgage, particularly as rates have risen, has confined homeownership to the highest earners in the capital. In many cases, first-time buyers have had to seek out smaller homes in more affordable pockets of the capital to make the leap.”
Tom Bill, head of UK residential research at estate agents Knight Frank, said many parts of the capital were nearing the limit of property value increases in the current climate.
“London’s affordability constraints mean it will underperform the rest of the country for house price growth over the next five years,” he said.
“Many people are still working out their new work/life balance after the pandemic and living in the capital is now less of a priority for some.”
