First-time buyers facing most expensive properties in 70 years as housing ladder 'broken', new report finds
| Published date | 23 April 2024 |
| Publication title | MyLondon (England) |
The report found that it's not just about the costs of buying a property, but also the costs of then owning the property. The BSA’s property tracker has found that struggles to afford mortgage repayments has become the biggest barrier to purchasing a property.
The report says that many first-time buyers looking to step onto the property ladder are finding they need a deposit as much as their gross household income, as well as facing increasing mortgage rates. These rates have reached highs last seen leading up to the financial crisis in 2008.
The report also looked at how high deposit costs are increasingly relying on the 'Bank of Mum and Dad', with an average deposit in London sitting at £144,000. More people are finding they need two, above average, incomes, in order to afford even a first property. People without family help or on single and lower incomes have been excluded from home ownership, the report found.
The increase in house prices relative to incomes over the last 20 years has increased the size of a deposit by more than 80 percent, the report found. As well as this, in London, the cap on higher loan-to-income lending also has the biggest effect of anywhere in the country.
London buyers having to borrow 3.3 times their income, due to rising mortgage rates.
The report says: "A 95 per cent loan to-value mortgage, if available, would be unaffordable to all but the most income rich, equity poor first-time buyers in London." When analysing London as a location for first-time buyers, the city is a clear "outlier" according to the data.
Based on the data from the final quarter of 2023, the average first-time buyer needed a deposit equal to 150 percent of their gross annual income, compared to the UK average of 100 percent of their gross income. London buyers also had to borrow 3.3 times their income, due to rising mortgage rates.
The rise in mortgage rates plus the amount people are needing to borrow relative to their incomes in London and regions in the south of England has resulted in these areas seeing the biggest fall in first-time buyer completions...
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