Most of the focus on the London pricing property market falls on what it means to buyers. When people talk about how London house prices have fallen in the past year, this is painted as a good thing. After all, with an increase in earnings growth, it feels as though it is easier for would-be buyers to step on to the property ladder.
Of course, we say it is easier, not easy. And, it is all relevant, because even though London has become more affordable in competition with previous years in the London market, it isn’t getting more affordable when it comes to the rest of the country.
If you take the price of property with the average annual salary, in London, the average property cost stands at 13.9 times the typical annual salary. This must be taken alongside the fact most mortgage lenders only provide a mortgage, at a maximum of, 4.5 times the buyer's salary. This leaves the average London buyer requiring a significant mortgage to get a home.
The Bank of Mum and Dad matters in the London market
You can see why the phrase “The Bank of Mum and Dad” is vital. A lot of parents and relatives are keen to assist their loved ones to own property. The thing is, for many people, it is a necessity, rather than a helping hand to speed up the process.
Returning to how London compares with other regions, it isn’t a surprise to learn that the second least affordable area of the UK is the South East of England. There is a house price to income ratio of 10.8, and in the East of England, this stands at 9.9.
If you are looking for something a lot more affordable, the North East of England has a lot to offer. The average property price is 5.6 times the standard of the average salary, and this ratio is pretty comparable to last years.
But we know for most people moving in and around London, comparisons with the North East of England are unhelpful and irrelevant. Yes, the house prices are much more affordable, but most people aren’t going to uproot themselves, their loved ones and change virtually every aspect of their life, just to buy a more affordable home.
No two parts of London are necessarily the same
This is why examining the different areas of London is crucial. There aren’t too many surprises left in England’s capital, so many people scour the market hoping for a gem that there aren’t many chances to find something no one else has heard of. You won’t be shocked to learn the Royal Borough of Kensington and Chelsea is the least affordable area of the capital.
The average price of property here is 25.2 times the average local salary. You might struggle to take on board that this ratio is much better than last years, which stood at 30.0.
Then we have Westminster, where the ratio stands at 19.5, although that too has fallen this year.
Verona Frankish, the Chief Executive Officer at Yopa, spoke about the market, saying; “While it’s encouraging to see affordability improve across many parts of Britain, it’s important to recognise that this has largely been driven by stronger earnings growth rather than any meaningful reduction in house prices, which remain high by historic standards. London is a good example of this as, although affordability has improved over the last year, the average home still costs close to 14 times the typical salary, which underlines just how challenging it remains for many buyers.”
With our local knowledge, we are best placed to help you with your first, or next, move. We are looking to provide you with as much support and guidance as we can in the market, no matter of your experience or expertise. When it comes to making an informed housing market decision, David Harris & Co is here to help you out.
David Harris & Co is your local property market specialist
Whatever move you wish to make, David Harris & Co is here for you At David Harris & Co, we understand what makes Finchley unique. Whether you’re buying, selling, or renting, our local expertise ensures we can guide you to the best decisions for your needs. Ready to explore Finchley’s property market? Contact David Harris & Co for expert advice and a stress-free experience. Call us on 0208 346 9122 to get started. Let’s make Finchley your next home.
