The number of first-time buyers in London has dropped in the past decade as house prices remain unaffordable, pushing young people and would-be buyers out of the capital.
London was the only region where the number of people taking their first step on to the housing ladder fell (down eight per cent) between 2014 and 2024, according to the latest data from Halifax.
The number of ftbs last year was 44,500. This was more than the 40,720 seen in 2019, when the property market experienced a prolonged lull before the ‘Boris bounce’ following the decisive Tory General Election victory in the December of that year.
It was also a 20 per cent increase on the 37,250 seen in 2023 when mortgage rates rocketed thanks to soaring inflation and the aftermath of Liz Truss’s disastrous mini Budget.
Halifax attributed this to more affordable mortgage rates following the sharp increases seen in 2023 following a decade of rock-bottom interest rates.
Amanda Bryden, head of mortgages at Halifax said: “Last year saw a big increase in the number of first-time buyers, up almost a fifth from 2023.
“This likely reflects an improvement in mortgage affordability, as interest rates eased and stabilised, providing more certainty for those stepping on to the ladder.”
North London estate agent Simon Gerrard said that the Chancellor’s decision to scrap stamp duty relief for first-time buyers also boosted the ftb market towards the end of the year.
He said: “This move has prompted a lot of activity as buyers sought to bring forward their purchases ahead of the change in April this year, to save thousands of pounds in stamp duty.”
London’s slowing market compared to the rest of the country is a reversal of the trend of a decade ago. Nationally, the number of first-time buyers is up 10 per cent in a decade, with a 25 per cent increase in buyer numbers in Northern Ireland and 20 per cent rise in Wales in the period.
Whereas London had a booming property market in 2014 when the rest of the country was suffering in the aftermath of the 2008 credit crunch, severe post-crash price cuts and a boost to housebuilding in some regions have made property more affordable for locals.
The post-Covid rise in home working has also seen many higher earning Londoners opting to buy homes further away from the capital and commuter belt as they became increasingly unaffordable thanks to rapid house price rises, stagnating wages and little new home building.
Average price of a first home in every London borough
Average UK first-time buyer house prices were about 6.6 times the average salary of £47,000 but there is a huge regional variation in affordability.
Hammersmith and Fulham was the least affordable area in the country, with the average house price of £622,120 more than 10 times the average local salary. The remaining nine least affordable areas were also all in London and the South East.
10 least affordable areas for first-time buyers in UK
|
Local authority |
House price to earnings ratio |
|
Hammersmith & Fulham, London |
10.2 |
|
Hillingdon, London |
9.9 |
|
Haringey, London |
9.6 |
|
Hounslow, London |
9.6 |
|
Harrow, London |
9.5 |
|
Waltham Forest, London |
9.4 |
|
Camden, London |
9.3 |
|
Oxford, South East |
9.3 |
|
Hackney, London |
9.2 |
|
Tandridge, South East |
9.2 |
In London the average first home cost £511,500 with the average deposit now £124,700. While house prices in the capital rose a comparatively modest four per cent, the average deposit value rose by 14 per cent, reflecting the jump in mortgage rates.
The average first-time buyer is now 33 years old, two years older than a decade ago when they were 31. Slough in Berkshire and Sutton, south London, have the oldest first-time buyers at 38 – five years above the UK average.
Similarly the high cost of buying means nearly two-thirds (62 per cent) of mortgage completions last year were in two or more names, with 38 per cent starting on the property ladder on their own.
Mr Gerrard said: “The planning situation in the capital has made building almost impossible in recent years, which has led to very limited supply coming onto the market, raising prices and making property ownership unaffordable for many.
“In parts of London, the average cost of a first home is now more than ten times the average salary, driving up the age of first-time buyers. The unaffordability of the London housing market is driving our children and our young people out of the capital.
“Meanwhile, recent figures from Zoopla show that the annual income needed to buy in London is absurdly high at £101,080, 2.4 times higher than the median salary in the capital.”