Home truths about the housing market in London
As widely reported in many media over several years, the dream of home ownership, or as some would call it a “British obsession” with home ownership looks more and more unrealistic for a whole generation of Londoners. Further, the figures from a new report show yet again how inflated and unrealistic the property boom of the last decade was. It also perhaps indicates how fast and loose lending was and that many mortgage applications may have contained perhaps inflated or exaggerated figures.
A survey into London property prices by the National Housing federation highlights some quite scary figures which show just how big the gap is between the affluent few and the vast majority living in the capital, as follows :-
- An average salary of £87,000.00 is needed to buy a property in London. Based on average annual salaries of less than £30,000.00 per person and rising unemployment, this figure is out of reach for the majority
- the average property in London sells for nearly £410,000.00.
- with new rules on bigger deposits where few lenders will lend more than 75% loan to value this means an average deposit of over £100,000.00 is needed.
- Calculations suggest that for a first time buyer on an average salary, even if they save all their disposable income it will take them 15 years to save up a deposit
- Only 4 London boroughs have an average house price which is less than £250,000.00 which are Barking and Dagenham, Bexley, Newham and Waltham Forest
- There are more than 800,000 people on a waiting list of social housing in London
- Rents are rising fast with the much larger proportion of people renting. Rents have risen by 30% in the past 3 years and are anticipated to rise at least an additional 20% over the next 5 years.
The clear thread from the above is that something will have to give. We can foresee a significant population shift out of London. This may be due to other factors such as many less lucrative City jobs in banking and associated sectors. Buy-to-let investment is looking particularly attractive. Could the seismic economic shifts also result in a return to closer families. The erosion of family ties is one of the more regrettable changes over the past 30 years, so maybe there is a silver lining to the above, which is otherwise quite depressing news !
What do you think ? Are you a prospective first time buyer ? Should the Government do more on social housing, can we afford to spend on social housing as a country in the current situation ?