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First-time buyers in London must now save for 31 years for a deposit

Residential homes in view of the city skyline at Denmark Hill, London
The number buying their first home fell to the lowest level in a decade last year - Hollie Adams/Bloomberg

A typical first-time buyer in London will have to save for 31 years to raise a deposit on a home, twice as long as their parents, analysis shows.

A Londoner on an average salary would need to save 10pc of their take-home pay for three decades to afford a 20pc deposit on a £438,000 property – the average price for a first-time buyer in the capital.

However, in 2003 the equivalent figure was just 15 years.

The generational gap reveals the extent to which wage growth has failed to keep pace with rising property prices, the dynamic fuelling Britain’s property crisis.

House prices across Britain are now more than nine times salaries, a ratio not seen for 150 years, according to a report from the asset manager Schroders. In London, homes cost 12 times annual earnings.

The number of first-time buyers fell to the lowest level in a decade last year, with spiralling mortgage costs and a resilient housing market pricing out prospective buyers.

It comes as Michael Gove prepares to announce an overhaul of planning rules to help young people on to the property ladder.

In an attempt to kickstart the construction of more homes, the Housing Secretary will scrap the size and time limits on turning office blocks into homes for residential use and order failing councils to build more houses on brownfield land.

Mr Gove is also pushing for 1pc deposit mortgages to be part of Chancellor Jeremy Hunt’s Budget on March 6, and has insisted the Government would ban no-fault evictions before the general election.

Mr Hunt is under pressure to cut stamp duty and introduce a “foreign ownership levy” to deter international investors from buying up residential property.

The move comes amid growing alarm at the slump in the Tory party’s support among young people and millennial parents, fuelled largely by the struggle to buy or rent affordable housing.

Polling figures at the weekend showed support for the Tories among voters aged 25 to 49 had slumped from 25pc when the party came to power in 2010 to 10pc now.

The Telegraph’s analysis, based on Nationwide and Office for National Statistics data, compared average London salaries of £43,628 in 2023 and £33,124 in 2003 to the average London property price for a first-time buyer in each year. The calculations assume no prior savings or financial help.

Tom Bill, at Knight Frank, said a generation of buyers was being squeezed out of the property market, particularly in the capital.

He added: “It’s increasingly tough for first-time buyers. Affordability is extremely tight in London.

“Younger people have been voting with their feet and leaving to get more bang for their buck elsewhere.”

Mr Gove has insisted that the Government’s target is still to build 300,000 houses a year, despite the commitment now being “advisory”.

However, Mr Bill said he was sceptical that housing targets are the answer.

“The demand-side measures like lowering stamp duties are the ones that will make a difference.

“Smaller deposits and longer term mortgages will help – rather than repeated promises to unleash hundreds of thousands of new homes.”

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