Being a homeowner is an aspiration that's becoming increasingly out of reach for many, with rising house prices, extortionate rents and a lack of savings all conspiring to make the move as difficult as possible. However, those in London could well find that the dream is even further away from reality, and with the price of an average home in the capital exceeding half a million pounds, it doesn't look as though the situation is likely to improve any time soon.
New research from eMoov.co.uk has taken a closer look at the London property market to see whether the typical price of a London home is actually the norm, and unfortunately, you'll be lucky to secure a property for less than the £550,000 average. In fact, fewer than half of the homes currently for sale are offered at the average price or less, and even then, you may not be able to shave that much off.
"It's no surprise to anyone that the majority of London is unobtainable to many from a property point of view," said Russell Quirk, founder of eMoov.co.uk. "However, this research highlights just how out of reach the capital actually is for UK home buyers, even for those with the sizable budget of £550,000."
Not only that, but even with that kind of budget, you'd still be forced to restrict your property search to fewer than half of the homes currently available in the capital, which "really highlights how little £550,000 can get you in the London market", added Russell.
However, this doesn't seem to be putting off buyers, with figures from the Council of Mortgage Lenders (CML) showing that mortgage lending in the capital is as strong as ever. Indeed, in the first three months of the year, London buyers borrowed a total of £7.1bn for a house purchase mortgage in London, an increase of 6% compared with the previous quarter and up 41% year-on-year.
First-time buyers were still able to secure plenty of mortgages, too, with this sector borrowing £2.9bn – which, despite being a drop of 7% on a quarterly basis, marks an increase of 19% year-on-year – while homemovers borrowed £4.2bn (up 18% quarterly and a healthy 63% year-on-year). Remortgaging activity totalled £4bn, which not only marks an increase of 4% from the previous three-month period and 36% on an annual basis, but also represents the highest remortgaging lending levels seen for a first quarter in the capital since 2009.
This means that the "usual seasonal dip in lending in the first quarter of the year didn't seem to impact London as strongly as the UK overall," said Paul Smee, director general of the CML, with the housing market in Greater London having some "unique characteristics". Perhaps surprisingly, there are more first-time buyers, said Paul, but lower overall levels of home-ownership: "Affordability and the supply of housing remain critical factors for the London market," he said, which could mean that the trend of unaffordability is set to continue.
If you've got your heart set on buying in the capital, all may not be lost – it all comes down to building a suitable deposit, and finding the right mortgage to suit. Check out our best buys to get started.
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