Record-high: average price of first home in London hits record high as first-time buyer deposits pass £90,000

There are now just five boroughs where average first time buyer prices stand at £350,000 or less.
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Ruth Bloomfield30 May 2018

London’s first-time buyers are having to scrape together a record £420,000 to fund the purchase of their first home — putting down deposits of more than £90,000 on average, according to new figures published today.

The price of the average first home has risen by two thirds in just five years — despite a downturn in general property prices in London, says the Lloyds Bank study.

In 2013 the average spend on a first home was £255,794. Today it is £420,132.

Deposits have also shot up more than 60 per cent, from an average £57,434 five years ago to £92,833.

Unsurprisingly the number of first-time buyers in the capital has fallen for the past three years, despite Government-sponsored schemes like Help to Buy, which cuts deposit requirements to five per cent and is widely credited with an increase of first time buyer activity elsewhere in the UK.

“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,” says Andrew Mason, mortgage products director at Lloyds Bank.

“As a result, first-time buyers have to wait until they are 34 before getting their first foot on the property ladder.”

£420,000: the record-breaking average price of a first home in London

And Mason is concerned that as buyers ripple out of central London in search of better value so the price gap between inner and outer London is starting to close, giving buyers on a budget fewer options.

“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,” he said.

There are now just five boroughs where average first time buyer prices stand at £350,000 or less, led by Barking and Dagenham with average prices of just over £305,000.

Bargain hunters could also consider Croydon (£349,817), Bexley (£324,843), Havering (£331,569), Enfield (£346,856).

Ironically, for buyers who can raise a deposit, the report found that owning a home is more cost-effective than renting one thanks to low interest rates.

Mortgage repayments on a three bedroom house would cost a buyer around £1,248pcm. Renting a similar property would cost £1,545 — a difference of £3,568 per year.