London's house price to salary ratio has hit a record high

 
Helen Cahill
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Political Uncertainty Dampens UK Housing Market
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The house price to salary ratio has hit a record high in London, piling even more pressure on the capital's strained property market.

The average house price in London reached £496,000 in October, and average earnings were £34,200, representing house price ratio of 14.5 times Londoners' salaries.

The ratios were also steep in Cambridge and Oxford, where the price to earnings ratio was 14.3 and 12.6 respectively.

Read more: This London borough has the UK's worst salary to house price ratio

The government has recognised that the housing crisis has become an unacceptable burden for young people, and in his Autumn Budget, Philip Hammond outlined his solutions.

Hammond's big reveal was a cut in stamp duty for first-time buyers on homes worth up to £300,000. He also announced a stamp duty holiday on the first £300,000 of any purchase worth up to £500,000, to help young people living in London.

Richard Donnell, research and insight director at Hometrack, said: "Unaffordability in London has reached a record high despite a material slowdown in the rate of house price growth over the last year. Lower housing turnover in the capital has led to a tightening of supply in recent months which has stabilised house price growth.

"Even so, the gap between average earnings and house price in the capital has never been wider."

Hometrack said London was expected to underperform over the next two to three years as earnings become increasingly stretched. However, the stamp duty holiday is unlikely to significantly change the number of first-time buyers in the capital because the biggest hurdle to home ownership is saving for a deposit.

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