The average Londoner will need to save up for over 100 years to be able to afford a house of their own, according to one new study.
The cost of living in the UK capital is a widely known fact, as a growing number of younger house-hunters turn to the private rented sector for affordable accommodation. New figures from Property Partner, though, place the situation into stark new light, as the site’s research reveals that a Londoner on the average annual salary of £34,320 would have to save for 121 years before they have enough for the deposit needed for an average priced flat.
It now costs more than £457,000 for the average London flat, according to the site’s report, which means that the deposit needed to buy the property, assuming the first-time-buyer secured a mortgage of four times the average London salary, would be £320,505.
If they were saving 10 per cent of their net annual salary towards a deposit, it would take more than a century to have saved enough, without any financial help from the bank of mum and dad.
“The British obsession with owning their own home is now for many, at least in London, a pipe dream,” comments Dan Gandesha, CEO and founder of Property Partner. “More needs to be done to incentivise the private rental sector. In Germany, long-term renting is generally accepted and the cohort of long-term renters in the UK is growing, by force of circumstance.”
Home ownership in England at lowest level in 30 years
2nd August 2016
Home ownership in England has fallen to its lowest level in 30 years, a new report from one thinktank reveals.
The Resolution Foundation’s analysis shows that English home ownership has fallen to levels last seen in 1986, with Greater Manchester, South and West Yorkshire and the West Midlands Metropolitan area experiencing double digit falls since their early 2000s peak.
Having peaked at 71 per cent in 2003, the proportion of people owning their own home across England has fallen steadily over the last decade by eight percentage points. While much of the discussion around the struggle to buy a home has centred on London, Greater Manchester has actually recorded the sharpest fall in home ownership of any major city area in the last decade or so.
Back in 2003, 72 per cent households living in Greater Manchester were owners – slightly above the average across England as a whole. However, home ownership has since plummeted by 14 percentage points – almost twice as fast as it has in England – so that by last year just 58 per cent of households living in Manchester owned their own home.
People living in Greater Manchester are now no more likely to own a home than people living in Outer London, with home ownership rates have fallen below all other big northern city areas apart from Tyne & Wear. The study attributes this trend largely to falling deposit affordability.
The Foundation warns however that plummeting home ownership isn’t confined to Greater Manchester. It notes that Outer London, South and West Yorkshire, and the West Midlands Metropolitan Area have also experienced double digit falls in home ownership since the early 2000s.
This fall in home ownership has corresponded with a near doubling in the proportion of private renters across England, up from 11 per cent in 2003 to 19 per cent in 2015. The proportion of households renting privately in Greater Manchester has more than trebled over that period – from 6 per cent to 20 per cent – while Outer London and West Yorkshire have also reported double digit growth.
The Foundation’s analysis follows an English Housing Survey report last week, which found that two–thirds of private and social renters cited affordability as a barrier to home ownership. It found also that fewer than one in 10 private renters did not expect to purchase a house because they liked it where they were, while just 1 per cent preferred the flexibility of renting to home ownership.
Stephen Clarke, Policy Analyst at the Resolution Foundation, says: “London has a well-known and fully blown housing crisis, but the struggle to buy a home is just as big a problem in cities across the North of England. The chances of owning a home have fallen fastest in Greater Manchester over the last decade, though the Leeds and Sheffield city areas have also experienced sharp drops.”Google+