First-time buyers (FTB) in London pay twice as much as the rest of the country to take their initial step on the housing ladder, according to research.
Despite the recent slowdown in London house prices, the average amount a FTB will pay for a home in the capital has now increased to a whopping £420,132.
In fact, during the past five years, the average price of a property bought by a FTB in London has risen by 64 per cent, from £255,794 to £420,132.
This is double that paid by FTBs across the rest of Britain, who pay on average £210,515, according to research from Lloyds Bank.
The typical deposit used to buy a first London home has also increased greatly to £92,833 and is more than double the £39,668 which other FTBs across the UK choose to put down as a deposit.
Andrew Mason, mortgage products director at Lloyds Bank , 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, FTBs 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.”
Since 2013, the number of buyers getting on the capital’s housing ladder has fallen by 5 per cent to 42,983 in 2017. Five years ago 17 per cent of all FTBs in the UK were in London. But now that proportion has fallen to 12 per cent.
Camden is the borough which commands the highest average deposit from a FTB in London, which has increased from £137,079 in 2013 to £175,844 in 2018. This marks a jump of 28 per cent.
However, it is Haringey that has seen the biggest increase in deposits paid by first-time buyers, which have more than doubled from £63,447 in 2013 to £131,827.
As a result of high property prices, the size of the average London mortgage for a FTB has risen by 65 per cent in the last five years to £327,299, compared to £170,847 for the rest of the UK.
However, it is still cheaper to buy than rent. A typical three-bedroom house would cost a London FTB around £1,248 per month with the rent for a similar property coming in at £1,545. This marks a difference of £3,568 each year.
Carl Shave, director of Suffolk-based Just Mortgage Brokers, said: “The divide between London property prices and the rest of the UK will be an aspect of our housing market for an infinite period of time and perhaps comes as no surprise to see these figures for the difference first time buyers are experiencing to buy in the city compared to the rest of the country.
"For some would be homeowners, venturing out of the capital will be an option however until better infrastructure is put into place and equal employment opportunities exist outside the area, many will still see it a necessity to remain.
"This in turn will maintain demand, with many FTBs continuing to seek high loan to income ratios and likely see the bank of Mum and Dad a source of assistance for many years to come.”
