Where to buy your first home: London’s best neighbourhoods for first-time buyers

Despite its high prices, Richmond enjoyed the strongest starter-home price growth across London last year

(Picture: Adrian Lourie)

Interest rates are rising, affordability testing is more stringent than ever, and the Government’s Help to Buy scheme has been wound up. Little wonder many first-time buyers feel as though they are facing a perfect storm of barriers on to the housing ladder as 2023 begins.

But the currently jittery state of the housing market — depending on which pundit you listen to, prices will end the year between three and 12 per cent lower than they started it — can also represent opportunities for smart buyers to grab a (relatively) cheap starter home.

New research published today by Savills reveals London’s best value — and most expensive — homes for first-time buyers, as well as the locations where prices are already on the slide and those where values are still climbing.

Navigating the market

London’s most expensive option for first-time buyers in search of a chic, central, starter pad is Holland Park, where the average first-time buyer home — classified as the lowest-priced 25 per cent of its market — would set you back a cool £840,000.

Some 13 miles east and arguably less Instagram-friendly is Barking, London’s cheapest option for first-time buyers in 2023. An average starter home here would cost just over £198,000.

Today’s research is based on Land Registry figures and shows prices are falling in the majority of the low-cost locations.

“Over the past six months we have seen prices on the wane because of the interest rate rises,” agrees Jeff Vedgen, branch manager at William H Brown estate agency in Barking. “A house that was attracting interest at £500,000 is now more like £470,000, and a flat that was £260,000 is now £220,000.”

Despite tempting price drops like these, some first-time buyers have pressed pause on their plans, frightened off by the prospect of worse to come this year.

Vedgen’s view is that, with realistically priced stock in short supply and decent demand levels, prices will “level off” this year rather than collapse. “At some point interest rates will come down and people will get their appetite to move back again,” he says.

Thomas Crabtree, regional director at Marsh & Parsons estate agent, says that while all buyers love the idea of buying at the very bottom of the market, in reality it is incredibly hard to time a purchase to get the very best deal.

“Some clues that the market may be approaching the bottom of the cycle include a gradual lack of stock for sale followed by increased guide prices on new instructions,” says Crabtree. “It’s also important to consider the local economy, job market and consumer confidence — as these can all impact the property market.”

Table: London’s 10 least expensive first-time buyer locations

Station	Travel zone	London borough	Average price in the year to Sept 2022 (1km surrounding station)	Annual price change
Barking	4	Barking and Dagenham	£198,422	-23.7%
Hornchurch	6	Havering	£290,000	-23.7%
North Wembley	4	Brent	£306,000	-10.0%
East Ham	3 & 4	Newham	£306,250	-7.2%
Uxbridge	6	Hillingdon	£307,500	0.6%
Bromley-by-Bow	2 & 3	Tower Hamlets	£310,000	-4.6%
South Harrow	5	Harrow	£314,500	1.5%
Dagenham Heathway	5	Barking & Dagenham	£315,000	8.2%
Hainault	4	Redbridge	£320,000	-3.8%
Upton Park	3	Newham	£321,125	-8.0%

Source: Savills

Where to buy

While it is tempting to think that buying in a location on the up will guarantee price growth, another school of thought is that buying somewhere while prices are dropping is smarter because you can get in cheaply and, in due course, prices will begin to rise again.

Today’s data analysed the average price of homes within around half a mile of each of London’s Underground stations, and data this granular can be difficult to interpret.

Homing in on very small areas means that a new development launch one year can skew price growth results the next.

A handful of unusually low-cost sales can do the same. And it is also likely that many first-time buyers have cut their spending budgets in the past six months because of rising interest rates.

This means that the suggestion that underlying first-time buyer prices in Wood Lane and White City have collapsed by almost a third in the past year is highly unlikely. What is more likely is that the profile of homes sold has changed in recent months, with buyers opting to spend less.

Table: London’s 10 most expensive first-time buyer locations

Station	Travel zone	London borough	Average price in the year to Sept 2022 (1km surrounding station)	Annual price change
Holland Park	2	Kensington & Chelsea	£840,000	5.3%
Hampstead	2 & 3	Camden	£829,500	3.7%
Notting Hill Gate	1 & 2	Kensington & Chelsea	£807,500	0.9%
Earl’s Court	1 & 2	Kensington & Chelsea	£720,000	12.8%
Kensal Green	2	Brent	£690,000	17.4%
Parsons Green	2	Hammersmith & Fulham	£650,000	8.3%
Latimer Road	2	Kensington & Chelsea	£647,500	-13.4%
Richmond	4	Richmond upon Thames	£645,000	24.0%
Boston Manor	4	Ealing	£640,000	6.7%
Clapham South	2 & 3	Wandsworth	£636,250	6.0%

Source: Savills

Estate agent Chris Randall, local director of Barnard Marcus, says that trying to play the housing market is about as easy as predicting which horse will win the Grand National. “Generally speaking by the time you find out an area is up and coming you’ve missed the boat,” he warns.

His suggestion is to look for areas of major price performance — and then buy nearby. “By following the Tube line you can predict the next area of growth,” he says. “Buy a place one or two stops further out and you may well benefit from the sale uplift in prices.

Jeremy Marcus, sales and marketing director at Barratt east London, suggests first-time buyers look for locations where regeneration is on the horizon.

“Most people spend at least five years in their first home — think about what that area will look and feel like in five years’ time,” he said. “Will there be new transport links coming? Are there new coffee shops and restaurants opening?”

Buying agent Emma Fildes, founder of Brick Weaver, agrees future investment is a good sign. “If you like the area and property, can afford it and see yourself staying for a few years, then you should go for it,” she said.

“Sitting on your hands for the perfect moment could leave you waiting a long time.”

Bromley-by-Bow has been revealed as one of the most affordable locations with average prices of £310,000 (Adrian Lourie)

Best budget postcodes

The majority of affordable locations identified in today’s study are unsurprisingly out in the boondocks: Hornchurch, Dagenham and Hainault on the fringes of Essex; North Wembley and South Harrow, both in the far north; Uxbridge in west London; and East Ham and Upton Park, in the old-school East End.

The most affordable location — and the one with the most in the way of urban buzz — is Bromley-by-Bow, nestled by the River Lea and with two Zone 2 stations from which to choose. Average prices stand at £310,000.

Anna Lasko bought her first home — a one-bedroom flat in the Leaside Lock development — in 2021. At 35, many of her friends were already on the property ladder and Lasko, an international channel manager, didn’t want to get left behind.

She couldn’t, however, afford to buy on the open market so she opted to buy a 25 per cent share in a property. A quarter share of a similar one-bedroom home at the development currently starts at £87,500.

Anna Lasco bought in Bromley-by-Bow’s Leaside Lock development (Ben Pipe Photography 2022)

She didn’t have the slightest hesitation about swapping affluent Richmond, where she had been living in a shared house, for E3. “My goal was to move east because all my friends are there,” she says. “It’s a really diverse community, and there are lots of people my age, which is great.”

Mabrur Ahmed, 39, has been living in the area for around a decade. He came for the good transport links, proximity to Stratford and affordability, and stayed because he loved its location close to east London (but away from the madness) and the plentiful green space —Victoria Park, Mile End Park and Queen Elizabeth Olympic Park.

Ahmed, who rents a flat with his wife, runs human rights organisation Restless Beings, and in 2021 he decided to set up Root/25, a not-for-profit cafe and community space in a Grade II-listed former police station on Bow Road.

“Bow Road doesn’t look or feel like a high street,” says Ahmed. “It is quite run-down and there are only a few shops.”

There are, however, some nice pubs popping up — old-school boozers like the Bow Bells are being given gastro-ish glow-ups. And Bow Arts, which runs artists’ studios, has opened a cafe.

Mabrur Ahmed runs non-for-profit cafe and community space Root/25 (Matt Writtle)

“There are green shoots,” agrees Ahmed. “I am happy more people are moving to the area, too; the more the better for local businesses and the local community.”

Already the area’s work-from-home crew can be found, laptops at the ready, at Root/25 on weekdays and Ahmed is happy to see tentative friendships forming among his regulars.

Tom Hawkins, head of residential development, London, at estate agent Hamptons, says that even in a run-down area new openings can be a great sign it is on the up.

“Buying with a medium-term vision is very sensible, with three to five years as a minimum,” he said. “My advice would be to buy in an area where you get immediate enjoyment, be it because of the shops, parks and green spaces, restaurants or cafes.

“If an area suddenly has two or three new hipster coffee shops and restaurants that’s normally a good barometer for an area on the rise.”

Top of the market

Despite its high prices, Richmond has enjoyed the strongest starter-home price growth across London — up 24 per cent during 2022 to hit an average of £645,000.

Happily other top performers are more affordable: Alperton, with an average price of £326,000 saw price growth of 22 per cent last year, while Hendon Central rose 18 per cent to reach £414,000 during the same period.

Leila Willingham moved from Poole in Dorset to London to be with her boyfriend, Jordan Stewart, who had previously been living in Fulham. The couple now rent a £1,650pcm two-bedroom flat in Richmond and would love to buy in the area, finances permitting.

For Willingham, 23, an account executive at a PR firm, and Stewart, 25, a software engineer, the area’s biggest asset is Richmond Park. “It is incredible,” said Willingham. “It makes Richmond feel like a country town but you can be in Soho within 25 minutes.”

Leila Willingham and Jordan Stewart are hoping to buy in Richmond (Daniel Hambury/Stella Pictures L)

Slightly less perfect are its prices. An average starter flat in the area costs £645,000, according to today’s research. “Jordan really wants to buy but I think we have been a bit spoiled living here,” says Willingham.

“What I love is that I can go to the gym, have a swim, then stop at the local bakery for a coffee and a cake, and there is a really nice selection of restaurants and bars for when we want to go out.

“It is friendly, by London standards, so it does feel like I’m part of a community, and I love being able to walk in the park. I think it really helps when you have a fairly stressful job, and then you have got all the theatre, and the galleries, and everything else in London so close by.”