New research indicates that first-time buyers now need to earn at least £77,000 a year to get on the property ladder in London.
If you take a closer look at the average cost required for a first-time buyer in the UK it is a far lower figure of £40,000 (taken from a report from KPMG). The same report also indicates that affordable housing has increasingly become an issue apart from above-average earners and those coming into inheritances.
It is also noted that KPMG have called for new long-term housing strategy to be implemented by the winner of this years General Election.
The annual wage of nearly £77,000 that a first-time buyer needs in London compares with the average annual wage in the capital of just £27,999. Across the country, a first-time buyer needs to earn £40,553 to get on to the property ladder, against an average wage of £22,044.
The regional breakdown by KPMG shows that in the south-east a first-time buyer would need an annual wage of £46,010, against the actual average wage of £24,391. The smallest gap is in Northern Ireland where the average wage is £18,857 against the £21,219 needed; in England the narrowest gap is in the north-east with an average wage of £20,149 against £23,616 needed.
Jan Crosby, the head of housing at KPMG, said: “These figures make for frightening reading and show that housing affordability is no longer just a problem for lower wage earners. Now, unless you earn well above average or receive an inheritance, it is unlikely you will be able to afford to buy, no matter where in the UK you live.
“And yet this isn’t just about home ownership, because our findings show genuine concern over wider affordability of housing, whether buying or renting. Being able to live in a stable home is a basic human need, tied up with important feelings of choice and certainty, and we are living in a world now where only a few can hope for that, which cannot be right.”
The figures are based on a 10% deposit and borrowing the remaining 90%, with loans at 4.5 times salary.
We have somewhat mixed thoughts on this research and wonder what yours are too? London has been for many years a place that many people dream of living and actually manage to do so. The property market will always have its peaks and troughs and property will be bought and sold. The evidence of KPMG’s research certainly flags up some important points that the new government may well need to address in the near future.
As you may know part of the service that we provide extends now in parts of London and is currently aimed at letting/renting properties to private tenants. We have seen a consistent demand for property for clients that either can’t afford to be a first-time buyer or who simply prefer the freedom of letting/renting. All in all we feel that although this research clearly shows that living (and buying) in London is expensive, that this is at the same time expected from people choosing to live in this area.