Friday, 24 September 2021

First-time buyers pay double in the capital

First-time buyers pay double in the capital

DESPITE the recent slowdown in London house prices the average amount a first-time buyer will pay for a home in the capital has now increased to more than £420,132 — almost double the £210,515 paid by first-time buyers across the rest of the UK.

New research by Lloyds Bank has found that over the past five years, the average price of a property bought by a first-time buyer in London has risen by 64 per cent — from £255,794 to £420,132.

The typical deposit used to buy a first London home has also increased greatly and is more than double that which other first-time buyers across the UK choose to put down as a deposit (£92,833 against £39,668). This is up 62 per cent when comparing what first-time buyers used as a deposit just five years ago (£92,833 against £57,434).

Since 2013, the number of buyers getting on the capital’s housing ladder has fallen by five per cent to 42,983 in 2017.

Five years ago, 17 per cent of all first-time buyers in the UK were in London but today that proportion has fallen to 12 per cent.

The number of London first-time buyers has fallen for three consecutive years while the overall number has increased for six years straight across the rest of the UK.

Camden is the London borough that commands the highest average deposit from first-time buyers, a figure that has increased from £137,079 in 2013 to £175,844 in 2018 — a jump of 28 per cent. However, it is Haringey that has seen the biggest increase in deposits paid by first-time buyers, which have more than doubled from £63,447 in 2013 to £131,827.

As a result of high property prices, the size of the average London first-time buyer mortgage has risen by 65 per cent in the last five years to £327,299, compared with £170,847 for the rest of the UK.

However, it is still cheaper to buy than rent. A typical three-bedroom house would cost a London first-time buyer around £1,248 per month with the rent for a similar property coming in at £1,545 — a difference of £3,568 per year.

Houses in London are notoriously expensive for all home buyers, currently coming in at more than £600,000 on average.

Lloyds found that the average house price in London has increased by 40 per cent from £435,712 in 2013 to £610,701 in 2018, compared with a growth figure of 20 per cent for England and Wales.

London’s once cheaper peripheries are now key growth areas. House prices in outer London boroughs, such as Barking and Dagenham, Haringey and Waltham Forest have grown by nearly half (47 per cent) in the last five years — from £348,230 to £511,184.

Inner London boroughs such as Camden, Greenwich and Lambeth also saw a surge of 44 per cent from £447,781 to £645,791 in the same time period — as did prime London boroughs including the City of London, Westminster and Kensington & Chelsea (which saw a rise of 37 per cent from £1.22m to £1.68m). This far outstrips the average growth seen across the rest of England and Wales (£238,333 to £286,822).

While prices are lower in outer London, the gap is closing. In 2013, the average house price of £348,230 for a home in outer London was 20 per cent less compared with London as a whole (£435,712). Today, by contrast, the gap is 16 per cent.

Andrew Mason, Lloyds Bank mortgage products director, said: “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.

“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.”


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