First time buyers need to save for over 11 years to buy a property in London
Buying a property on the open market in London is increasingly reserved for the elite as first time buyers could take over 11 years to save for the deposit needed to by a one bedroom home, new research suggests.
Without the assistance of alternative home ownership schemes, such as Shared Ownership, buying a property is seemingly only available to some of the city’s top earners, a new report claimed.
An analysis from Shared Ownership portal Share to Buy says that the median income of a first time buyer in London now averages at £66,111 which is more than three times the average UK salary.
Meanwhile, the typical deposit required to purchase a one bed or studio apartment is £77,407, and £112,555 for a three bedroom home. As a result many are unable to save such a sum and over a third reported that a proportion of their savings came from a gift or loan from family or friends.
Shared Ownership buyers in London have an average deposit of £24,358, less than a third of the typical open market requirement. Minimum deposits for Shared Ownership homes in London average £6,335.97 for a one bedroom home or £8,390.60 for a three bedroom home.
The medium household income of London based registrants on Share to Buy is £42,000, almost 40% less than the average first time buyer in the capital.
Shared Ownership offers buyers the opportunity to purchase a percentage share of a property between 25% and 75% of the home’s full market value, paying a subsidised rent on the remaining share.
Buyers can choose to purchase additional shares as and when they can afford to, known as staircasing, allowing them to ultimately own their home outright.
‘There is no doubt that home ownership is becoming increasingly out of reach for many in the capital. Our figures show that schemes such as Shared Ownership really are the most achievable, and perhaps only route onto the housing ladder for many first time buyers,’ said Nick Lieb, head of operations for Share to Buy.