Exclusive data from Zoopla shows that the annual income needed to buy a home in London is now £101,080, given that the average house price in the capital is £535,100, which is 2.4 times — or £59,499 — higher than most London salaries.
Zoopla’s salary estimates are based on the average cost of a property in each borough, assuming the buyer puts down a 15 per cent deposit and a mortgage 4.5 times their income. These have been rounded to the nearest £10.
In Barking and Dagenham, the capital’s most affordable borough where the average home costs £336,800, the average annual income needed to buy is still £63,620. This is £22,039 more than the average worker earns.
Behind Barking and Dagenham, Croydon, Bexley and Newham are London’s most affordable boroughs. However, the income needed to buy in these areas is £74,430, £75,260 and £76,020 respectively.
In fact, the average income needed to buy a property is more than double the median salary in 26 out of 33 boroughs. This leaves only seven boroughs — Barking and Dagenham, Croydon, Bexley, Newham, Greenwich, Havering and Enfield — in which two people on an average salary would be able to purchase a home.
London’s most expensive boroughs
In London’s most expensive boroughs, the average income needed to buy a property is even greater. Kensington and Chelsea has the highest property prices in London, at an average of £1,136,900. According to Zoopla’s calculations, the salary needed to buy in the west London borough is £214,760. This is 5.2 times more than the average income, or £173,179 short.
Westminster, Camden and Richmond upon Thames are also among the most unaffordable, with salaries of £180,860, £147,000 and £142,990 needed to buy in these areas.
Greenwich saw the biggest price rises, with the average property increasing by £11,200 (2.7 per cent) in value. The average home in the borough now costs £450,600.
This was followed by Lewisham (£10,890, or 2.5 per cent) and Haringey (£11,000, or two per cent).
The good news is that incomes are increasing too: according to the ONS, the median salary went up 6.3 per cent in the last year. But with changes to stamp duty in April, buyers in the capital — especially those purchasing for the first time — will see their costs multiply.
In Haringey, for example, the average first-time buyer pays £4,525 on stamp duty, which will rise to £15,775 later this year. First-time buyers in Haringey, Hackney, Richmond upon Thames and Wandsworth are set to face the biggest increases, analysis of data collected by mortgage advisor Alexander Hall found.
What does this mean for buyers?
“London’s property market is constantly moving which can make it more challenging for house hunters to find a property within their budget,” says Matt Thompson, head of sales at Chestertons. “Demand from various buyer demographics tends to outgrow the volume of properties available for sale which sees property values go up or at least hold their value.
As buyers are often required to act fast, we recommend staying in regular contact with their chosen estate agent who has the finger on the pulse of the market, will be in a better position to spot opportunities and can manage tough price negotiations.”
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