Londoners 'must earn £100,000 per year before they can afford a home'

 
Pricey: Londoners 'need to earn £100k to buy a home'

Londoners must earn more than £100,000 before they can afford to take out a mortgage big enough to secure a home in the capital, a report claims today.

Even with a deposit of 20 per cent, only workers earning six figures are now able to obtain the funding they need to get on the housing ladder.

The research from the National Housing Federation comes as government figures show average London house prices were unchanged at £514,000 in August. Despite the signs of cooling in the market, that is still 19.6 per cent higher than a year previously. First-time buyers paid an average of £403,000, down from £405,000 in July.

The NHF report, London: Broken Market, Broken Dreams, bases its calculations on workers with a 20 per cent deposit trying to buy an average-priced property in their area with a mortgage of three and a half times their salary.

Across London as a whole they would need an income of £108,500, more than three times the capital’s average salary of £33,000.

The most unattainable local property market is Kensington & Chelsea, where a would-be house buyer needs a salary of £378,380 to buy an average-priced home. The most affordable is Barking & Dagenham, where a salary of £42,871 secures a loan big enough to buy.

Dave Smith, external affairs manager for London at the National Housing Federation, said: “The fact that even well-paid professionals in the City can’t afford to buy a home and in many cases even struggle to pay their rent, should send alarm bells ringing. From employers struggling to attract new recruits to young people seeing their dreams of owning a home fade away, and lower-paid workers being priced out of living in the capital altogether, the effects of London’s housing crisis are being felt by millions of people every day.

“To keep London as a thriving city that’s admired around the world, its out of control housing costs must be tackled head on. We urgently need an ambitious, long-term plan and for politicians from all sides to commit to ending the housing crisis within a generation.”

A separate report from agents Knight Frank today predicted that London property prices will continue to rise over the next five years — albeit at a lower rate. It predicted that values will go up 3.5 per cent next year across the capital as a whole and by 25.8 per cent by 2019. However, it said central London prices could be hit by the introduction of a mansion tax by an incoming Labour administration.

The market in London has been cooling in recent months after annual rises of 20 per cent or more in the first half of this year. A stronger pound, fear of interest rate rises and nervousness about the outcome of next May’s general election have all played their part.

Campbell Robb, chief executive of Shelter, said: “Ever-rising house prices mean more young people and families stuck in the ‘rent trap’ without a settled home of their own.”

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