Typical first time buyers in London will need to earn over £100,000 a year by 2020, new research by housing and homelessness charity Shelter shows. This is an increase of over a quarter on the £80k needed for a typical first time buyer’s mortgage today.
On top of this, a typical deposit will be £138,000 to keep up with rocketing house prices in the capital, which are projected to rise to £558,000 over the next four years.
The research looked at the salary and deposit needed for the average first time buyer today, and calculated what they would be in 2020 if they grew in line with projected increases in house prices.
These figures come as no surprise given that, over the last five years, the country’s severe housing shortage has seen house prices rise fifteen times faster than wages in London. In central borough Westminster currently, the average house price is around £1.1 million pounds, a growth of 67% in the last five years. Compared to this, the average salary of a worker in the same area is around £42K per year, a figure which has actually dropped by 7% over the same period.
Shelter is warning that, unless the next Mayor commits to building homes that people on ordinary incomes can actually afford, the situation is only likely to get worse.
Campbell Robb, Shelter’s Chief Executive, said: “When house prices are increasing fifteen times faster than the average wage, it’s no wonder Londoners on ordinary incomes are being locked out of a home of their own.
“With the situation only set to get worse, Generation Rent will be forced to resign themselves to a life in expensive, unstable private renting, and wave goodbye to their dreams of a home to put down roots in.
“It doesn’t have to be like this. The next Mayor of London has the power to turn our housing crisis around, and with only weeks before Londoners go to the polling booth, the candidates must commit to investing in homes that people on ordinary incomes can actually afford and making renting more secure.”
Mike, a nurse, is currently renting and is facing having to move away from the capital because of high housing costs.
“On a nurse’s salary and with house prices so high, I can’t see how I’ll ever own my own home. At the moment, it feels like nothing more than a pipe dream.
“I’m stuck renting and looking at moving away from where I currently live because rents have gone up so much as well. It just seems so unfair – if you work hard, you should be able to afford a place to call home.”