Although London has experienced a recent slowdown in the rise of its property prices, the average amount a first-time buyer in the capital will have to pay has now increased to over £400,000, double that paid by first-time buyers across the rest of the UK, according to research from Lloyds Bank.
During the past five years, the average price of a property bought by a first-time buyer in London has risen by 64 per cent, from £255,794 to £420,132. The typical deposit needed to buy a first London home has also increased exponentially, and is more than double what other first-time buyers across the UK choose to put down as a deposit, at £92,833 and £39,668 respectively. This figure represents a 62 per cent increase compared to what first-time buyers in the capital used as a deposit five years ago.
Since 2013, the number of buyers entering London’s property ladder has fallen by 5 per cent to 42,983 in 2017. Five years ago 17 per cent of all first-time buyers in the UK were in London, whereas now that figure is at 12 per cent. The number of London first-time buyers has fallen for three consecutive years, while the overall number across the rest of the UK has increased for six years straight.
However, despite the decrease in first-time buyers in the capital, Lloyds study found that it is still cheaper to buy than rent. A typical monthly mortgage payment on a three bedroom house would cost a London first-time buyer roughly £1,248, whereas the rent for a similar property would be £1,545, a difference of £3,568 per year.
Lloyds Bank mortgage products director Andrew Mason said: “Despite the recent slowdown in London house prices this latest data shows how expensive it has become to live in the capital, particularly for young people trying to get on the ladder for the first time. As a result, first-time buyers have to wait until they are 34 before getting their first foot on the property ladder.
“While property prices drop as you head to the fringes of the capital, our analysis is showing that this gap is closing as house price growth in Outer London boroughs is continuing to increase at a greater pace than Inner London boroughs. This healthy growth may be linked to a high demand for these more affordable properties as well as some areas benefiting from the new Crossrail link due to open next year as commuters move further afield.”
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