Crossing the threshold: number of under £250k London homes at all-time low as 'affordability crisis' worsens

London’s crushing “affordability crisis” is still getting worse with the proportion of the capital’s homes changing hands for less than £250,000 falling to an all-time low, new figures reveal today.

For the first time ever fewer than five per cent of homes bought with mortgages during the third quarter of the year cost their new owners under a quarter of a million pounds, according to an analysis by agents Savills.

As recently as 2014 a third of all sales were below this level, and just a decade ago it was almost half.

The £250,000 threshold is seen as significant as it marks the outer limit of what a couple on a typical London household income of around £50,000 could afford to buy with a 20 per cent deposit and a four times salary mortgage.

The data, supplied by trade group UK Finance, suggests Sadiq Khan has made only limited progress in his manifesto goal of stopping Londoners ”being priced out of our city” since his election as Mayor in 2016.

It shows that only 3,500 deals were completed at £250,000 between June and September, out of a total of 70,200.

Paula Higgins, chief executive of the HomeOwners Alliance lobby group, said: ”These are shocking figures, they just show how dire the situation still is. If you are going to have any chance of getting on the housing ladder you are going to need bank of Mum and Dad or a six figure salary. Providing decent, secure homes for people to live in should be our absolute priority.”

While the property market has slowed sharply in London over the past three years, prices in less fashionable areas, particularly in east and south London, have continued to rise as desperate first time buyers have sought out neighbourhoods where they can still afford homes.

Prices in outer London have also been buoyed by the Government’s Help to Buy scheme which allows buyers to borrow up to 40 per cent of the purchase price from the Government.

The trend is reversed for purchases of homes bought with mortgages worth more than £500,000, which has grown from just 11 per ceet of the total in 2009 to almost 40 per cent now.

Lucian Cook, head of UK residential research at Savills, said: “Historical house price growth means the London first time buyer market is now confined to more affluent buyers. Half of all first time buyers in the capital have a household income of more than £69,000, they are borrowing more than four times their income and have to find a deposit in excess of £90,000.”

The average price being paid by a first time buyer in London passed the £400,000 mark for the first time in the third quarter of the year.

Across the UK more than 60 per cent of mortgaged home purchases are below the £250,000 mark, peaking at 78 per cent in the north west of England.

Mr cook added: “Stretched affordability in London means that the capital has less potential for price growth over the next five years than markets in the Midlands and North.

"We expect prices in the capital to rise by just 4.5 per cent compared to around 20 per cent in markets further afield.”