Londoners need a 266 per cent pay rise to be able to afford a mortgage on a home in the capital, a leading industry body has claimed, painting a bleak picture for prospective buyers.
The National Housing Federation (NHF), which represents affordable housing providers, said the average London home now costs £526,085 – more than 16 times the average salary of £32,838 a year.
This means a household needs a combined income of £120,248 to be able to afford an 80 per cent mortgage – or a bumper pay rise.
Bexley, Barking & Dagenham, Havering, Croydon and Redbridge were the most affordable boroughs. However, homes in these areas still cost 11 times average incomes, NHF’s analysis of 2014 Land Registry data shows.
Unsurprisingly, Kensington and Chelsea emerged as the most expensive borough where, despite average earnings of £59,000, homes were still 33 times incomes at £1.94m.
Overall, more than half of all London boroughs still required an income of more than £100,000 to buy the average house.
Rising property prices are forcing more people to rent, with recent research from PwC predicting that more than 60 per cent of Londoners will be renting by 2025 compared with 54 per cent today.
However the cost of renting privately is also becoming more unaffordable compared to average pay packets, the NHF said, averaging £1,461 per month and taking up more than half of average incomes.
The NHF’s Home Truths report has been released today to mark the launch of a new campaign urging London’s next mayor to give housing associations priority access to public land.
In return the sector is pledging to ramp up the delivery of more affordable homes needed to help plug the 151,000-home shortage. Housing associations built 40,000 homes for rent and sale in London over the last mayoralty, the NHF said.
NHF chief executive, David Orr said: “Living in London doesn’t have to mean living in cramped, overpriced, insecure accommodation; the housing crisis is not inevitable. Housing associations know how to tackle the crisis and provide quality homes which suit all Londoners.
“Both Sadiq Khan and Zac Goldsmith have correctly identified housing as one of the biggest challenges facing London. We’re here to say that we know how to help. If the next mayor works with us to tackle the housing crisis at a London level, as we are working with the Government to tackle it at a national level, we can go a long way towards solving the housing crisis.”