Home ownership has become an unobtainable dream for many Londoners, with the number of first-time buyers in London down 24 per cent between January and August 2023.
There were just 24,323 successful new homeowners in the capital in the first half of the year compared to 32,110 in the same period of 2022, according to Halifax.
The average age of a first-time buyer has also risen — to 32 — as saving the necessary deposit has become a Sisyphean task. The average deposit a London first-time buyer needs to find is £113,078.
That’s £9,922 less than in 2022 as property prices in the capital falter. But the run of interest rate hikes, although paused by the Bank of England as of last week, has seen mortgage rates go up too.
“The growth in house prices over the past decade means raising a suitable deposit remains a significant hurdle,” said Halifax Mortgages director Kim Kinnaird. “Increasing costs are making the road to home ownership longer.”
Property experts have blamed high house prices and interest rates, calling upon politicians to address the needs of first-time buyers.
“With interest rates at a 15-year high, affordability is proving to be a significant drag on activity in the UK residential market,” said Chris Druce, senior research analyst at Knight Frank.
“First time buyers, who are typically unable to access the best mortgage rates when starting out, are particularly exposed to this,” he added.
“With the political party conference season underway, fresh polices to support first-time buyers are needed,” said Druce.
Assistance for first-time buyers has been thin on the ground since the controversial Help to Buy scheme closed in 2022.
Although the government has temporarily increased the threshold for Stamp Duty for first-time buyers, that will only hold until 2025.
Singletons looking to get a foothold on to the housing ladder are finding the journey particularly arduous.
“When people are ready to buy a home, most are doing so in joint names, which helps both in terms of costs and affordability,” explained Kinnaird.
The least affordable region
London remains the hardest-to-afford place in the UK for first-time buyers, with an average house price of £496,208 in 2023, reports Halifax. Lenders also expect a higher deposit of 23 per cent of the purchase price.
Of the ten least affordable local authority districts in the UK, nine are in London.
The borough of Newham is the least affordable place to try and buy a house in the UK, with house prices 10.5 times average annual earnings for residents.
By comparison, the houce price to earnings ratio in Inverclyde in Scotland is just 2.8, making it the most affordable place to buy property in the UK.
Nine least affordable places to buy
Borough |
House price to average earnings ratio |
Newham |
10.5 |
Barnet |
10.3 |
Harrow |
10.3 |
Camden |
10.1 |
Brent |
10.0 |
Westminster |
9.9 |
Hammersmith and Fulham |
9.7 |
Enfield |
9.6 |
Ealing |
9.5 |
Source: ONS’s Annual Survey of Hours and Earnings (ASHE) April 2022, uplifted to June 2023 using ONS EARN01 weekly earnings growth
According to official statistics, house prices in London have risen 78 per cent since 2008, while people’s earnings have fallen eight per cent over the same period when adjusted for inflation.
While those already on the property ladder will have seen their investment increase, for first timers saving for a deposit and mortgage approval has become close to impossible without significant help from the Bank of Mum and Dad as rents across the capital continue to soar.
