Anyone looking to get a foot onto the property ladder in London may have had a spring in their step lately. For the past four months, house prices in the British capital have been falling.
But before young Londoners start their mortgage applications, the UK’s Office for National Statistics has a brutal reality check. Using 2017 data, prospective first-time buyers in London would need to spend 13 times their earnings on a property, according to a report published today. In the north east of the UK, by contrast, first-time buyers would spend 5.5 times their earnings on homes.
The figures are a rough guide to affordability for first-time buyers, using the lower quartile of prices paid for residential properties and dividing that by earnings of 22 to 29 years olds. (The average age of a first-time buyer in Britain is now 30, an increase of seven years since the 1960s.)
In London, the median house price in the lower quartile is a punchy £344,000 ($452,500), versus £146,500 for England and Wales as a whole.
The data on actual purchases by all first-time buyers with mortgages, although somewhat more encouraging than the prospective numbers on theoretical affordability, remain daunting. Across England and Wales, on average these buyers had to spend 4.3 times their annual income to purchase their property last year. In many parts of London, first-time buyers spent more than six times their income to buy a house.