Buying a home in the capital was always going to be a costly affair, but thanks to prices rising by a staggering 27% in the last three years alone, those looking to buy a home in London are facing a massive deposit-saving challenge. Indeed, the latest research by My Home Move has discovered that the average deposit for a property in Greater London is now nearly three times (170%) more than that of the rest of the UK, which clearly shows the extent to which prices in the London property market have streaked ahead.
Over the last three years, the average deposit for someone buying in the capital has grown by 30%, up from £99,375 in 2013 to a massive £127,000 today, completely dwarfing the average deposit of £46,976 across the rest of the UK. Home buyers in London therefore have to amass a very significant amount of money in order to fulfil their home-owning dreams, which could soon mean that all but the wealthiest will be unable to afford property in this part of the country.
What makes these figures even more shocking is that the average deposit as a proportion of house price across the rest of the UK has actually fallen over the last three years, dropping by 1.81%. The London market, however, has remained robust and therefore continues to place huge demands in terms of deposits on home buyers.
"The London property market has always commanded greater prices than anywhere else in the UK; but our research has shown just how extreme the situation is becoming," commented Doug Crawford, CEO of My Home Move. "The situation is unsustainable and has been driven by rising house prices. For some, their deposit will come from the equity in the property they are selling. However, for many, they will still need to save tens of thousands of pounds to make the move onto and up the property ladder."
Prices in the capital, and indeed elsewhere, may have been on a definite upward trend, but this doesn't necessarily mean that you will not be able to buy your dream home. Preparation is key, and in order to save a decent deposit, you will need to make your money work as hard as possible.
If you're a first-time buyer, you may want to look into a Help to Buy: ISA. These ISAs are specifically designed to help first-time buyers get onto the property ladder and the Government will give you a 25% top-up for the money you save into it. It's definitely worth a look!
If you're already on the property ladder, you need to find a competitive savings account in which to build your deposit hoard. A regular savings account may be ideal as it will allow you to make regular contributions. Some of these accounts also have penalties for missed payments or withdrawals, so they can help to keep you on the straight and narrow!
Once you've done the hard work and saved your deposit money, you need to find a competitive mortgage. Rates are still low, so don't miss out by delaying! You can start your search by scouring our mortgage best buys.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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