Recent research has found that first time buyers in London pay twice the amount as their counterparts across the rest of the UK when taking their first step on the housing ladder.
According to Lloyds, £420,132 is the average amount those in the capital pay for their first home – double the £210,515 paid out by the rest of the country. Whilst housing indexes show that prices in London have fallen in recent months, over the last five years in general, prices paid in the capital have grown by almost two thirds.
The extent of growth can be seen in deposits paid for example; on average, a first time buyer in London will have to fork out for a deposit of £92,833 – around 62% higher than the amount required in 2013. It’s a similar story even outside the city centre, with prices in London’s outer boroughs having increased by 47% over the last half a decade.
Over the same period in London, the average price of a property bought by someone taking their first step on the housing ladder has risen to £420,132, up from £255,794.
High prices have also had a noticeable impact on the number of first time buyers getting on the ladder in London in the first place; since 2013, the proportion of the group who reside in London has dropped to 12%, down from 17%.
Whilst the number of first time buyers across the UK has grown over the last six years, the opposite has been observed in London, with the figure decreasing over the last three.
It’s important to note that whilst London house prices are clearly significantly higher than elsewhere in the UK, the research shows that it is still cheaper to buy rather than rent. Whilst renting a three-bedroom home would cost around £1,545 per month in the city, purchasing a similar home would cost around £1,248.
Commenting on the findings was Lloyds Bank mortgage products director, Andrew Mason. He 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.’
