Homes in London have become drastically less affordable under the current government, according to a new report published today.
A consumer’s capacity to buy a home in the capital is now 77 per cent worse than it was in 2010, according to the latest Ability to Buy index from the estate agent Hamptons International.
London stands in stark contrast to the rest of the country, where affordability has improved by two per cent over the past five years, according to the index.
Hamptons considers changes in house prices, incomes, interest rates and the cost of living in order to measure so-called “ability to buy”.
Ability to buy in London fell 73 per cent in the past year alone, according to the index. Hamptons International pointed to a 17 per cent increase in house prices, as well as a nine per cent increase in childcare costs and a 1.6 per cent fall in average incomes, to explain the drop in affordability in the capital.
Nationally, the ability to buy slipped by three per cent in 2014, according to the report.
Fionnuala Earley, residential researcher director at Hamptons International, cited a variety of factors to explain the changes.
“Despite some of the lowest mortgage rates on record, falling food and oil prices and some increase in wages, ability to buy is worse than this time last year,” she said. “This is largely a result of house price growth outperforming incomes. But for working families with children, the growing costs of childcare eats into the amount of money left at the end of the month to service a mortgage.”