First time buyers in the capital have never had it tougher and recent news shows that it is not getting any easier. They now need £63,000 more than they did in July last year.
The UK saw the average cost of a first home rise by 12%. With properties in London being as much as 19.3% higher than they were 12 months ago, a first purchase for buyers has now increased from £387,000 to £499,000. Those looking to buy will now be faced with a minimum of a 5% deposit of 19,350, an increase of £3,150 since July 2013.
Alex Hilton, director of campaign group Generation Rent said “The price of a first home is 12% higher than it was last year – a bigger rise than for people who already own and the highest it’s been since 2010. The average private renter effectively spends two days every week working to pay off their landlord’s mortgage, and with prices rising at this rate fewer renters will ever escape this trap,”
Although the London and the south east saw the most significant increase in house prices, evidence of the property boom can be seen nationwide. According to the Office for National Statistics property prices across England and Wales soared up to average of 10.2% in the year leading up to June. When London and the south east have been removed from the equation the average increase for property across the UK is 6.3%.
Last week, official figures stated that wages fell for the first time since the 2009 recession which, when combined with the current state of the housing market is putting private renters and potential buyers in an unsettling situation. Many have been left with the idea that moving out into their own home is becoming less financially viable and many believe they may never leave the rental market.
The current increase in property prices is partly due to the demand outstripping supply. If there are more people looking to buy than there are selling, the buyers will compete to obtain the property, driving the price up. According to ‘The National Housing Federation’, unless we build more of the right homes at the right prices in the right areas, many young people will be stuck in their childhood bedrooms and parents will be unable to move on.