The difficulty of getting onto the property ladder has increased dramatically for London workers over last two decades, new research reveals this morning.
Estate agent Hamptons International said that calculations based on income after taxes, essentials and mortgage payments showed it was significantly harder to buy in the capital than in any other region of the country.
The ability to buy index produced by Hamptons International scored 52.9 for the three months to September 2015. A score of 100 represents the difficulty of buying a house in 1997. All other the regions of the UK are within 12 points of their 1997 score.
In the North West, North East, Yorkshire and the Humber, West Midlands and Wales it is easier for local workers to buy a house than it was in 1997.
“With inflation remaining low and wages increasing in real terms, most households are seeing their money stretch a bit further. The added bonus of the higher tax free personal allowance announced at the last Budget, means households get to keep more of their income, improving their ability to buy. On top of this, global economic uncertainties mean that interest rate rises look even further away, giving buyers a little more leeway too,” said Fionnuala Earley, director of residential research at Hamptons International.
The government introduced a new policy called London help to buy at the beginning of this month. It loans 40 per cent of the value of a house to a home buyer provided the house is a new build and they can put together a deposit of five per cent. It means a buyer only needs to borrow the remaining 55 per cent of the property value.
“Ability to buy is much harder in London as prices have increased fastest. This makes the London Help to Buy scheme a welcome offer for new buyers. For a first-time buyer the bottom line is £673 extra at the end of the month simply due to the benefit of the government’s interest free loan."