First Time Buyers Need To Earn £75k To Buy A Flat In London
A new report to be issued by KPMG on Monday will show that a first time buyer in London needs to be earning at least £75k per annum if they want to buy a flat. The news will be greeted with incredulity as buyers across the capital come to the realisation that owning a home in the capital is simply no longer affordable. This highlights the disconnect between house prices in London and the rest of the UK. Across the rest of the UK a first time buyers needs to earn a minimum of £41,000. The problem further highlights the problem for politicians and puts further pressure on councils to provide more affordable accommodation for Londoners.
Unless you are a high earner or are likely to inherit money at some point in the near future you will not be able to live in the capital unless you can afford to rent a property. If you earn an average wage you are going to be pushed out to the suburbs as prices look as thought they will continue to rise. There is also further evidence that banks are now engaging in risky lending . The number of borrowers that borrowed 4.5 times their income has increased to just over 88,000 last year. This is an increase of 64% compared to 2010 and is considered as risky lending by the Bank of England. Risky lending is also fuelling house prices as buyers compete with overseas investors for homes in the capital
The average annual wage of most Londoners is just under £29,000 and nowhere near the amount required to buy a home. This is forcing buyers to rent instead and this is having an impact on rental prices. If you live in the south-east you will need to earn around £46,000 to buy a home and if you live in the north-eat you need to earn an annual salary of around £25,000.
It appears that the housing market has gone away for so many people and according to experts will need serious reforms if home ownership is to be a realistic prospect for young families across the UK. The property market has been hijacked by many buy to let landlords, international investors and now pensioners will be competing with first time buyers for flats in the capital. First time buyers are going to continue to struggle unless the further taxes are introduced on buy to let investors according to some property experts. Taxation has already been used by the current government to try to curb international buyers from buying up half of London but this appears to have had little impact on the number of foreign buyers. London is a magnet for investors and this is unlikely to change .