First time buyers in London are paying double what their counterparts in the rest of the UK are to get on the property ladder, according to the latest figures from Lloyds Bank.
The average price of a first-time buyer home in the capital has risen by two thirds over the past five years to hit £420,132, versus an average of £210,515 in the rest of the country.
The average deposit paid by London-based first-time buyers has also gone up 62 per cent since 2013 and is now £92,833, the lender revealed.
Huge price increases have led to a 5 per cent decline in the number of buyers getting onto the property ladder in London, and the proportion of UK first-time buyers in London has fallen from 17 per cent five years ago to 12 per cent.
Camden is the London borough where buyers are having to stump up the highest average deposit, at £175,844, up 28 per cent since 2013, while Haringey has seen average deposits more than double over the same period, rising from £63,447 to £131,827.
Despite the daunting price tags on properties in the capital, Lloyds Bank’s research shows it is still cheaper to buy than rent, with a typical three bedroom house costing a London first-time buyer around £1,248 per month as opposed to rent of £1,545, a difference of £3,568 per year.
“Despite the recent slowdown in London house prices this latest data shows how expensive it has become to live in the capital, particularly for young people trying to get on the ladder for the first time. As a result, first-time buyers have to wait until they are 34 before getting their first foot on the property ladder,” said Andrew Mason, Lloyds Bank mortgage products director.
“While property prices drop as you head to the fringes of the capital, our analysis is showing that this gap is closing as house price growth in outer London boroughs is continuing to increase at a greater pace than inner London boroughs. This healthy growth may be linked to a high demand for these more affordable properties as well as some areas benefiting from the new Crossrail link due to open next year as commuters move further afield.”
Official figures published in April revealed that the average house price in England and Wales last year was almost eight times the average annual income, while in London prices were more than 13 times average earnings.
The government has pledged to build 300,000 houses annually to address the current crisis, as a lack of stock is helping prop up prices. However, recent research by Heriot-Watt University showed homes must be built at a greater rate - 340,000 per year until 2031 - to address the current backlog, which in England stands at 3.91m houses.
Source: The Independent