This has led to some property sources talking about an end of the golden era of the property market, and if you only look at headlines, you would fear that the London property market was ready to nosedive.
This is clearly not the case. While prices in London may now be rising at a slower rate than prices around the country, it is still difficult for many people to get on to the property ladder in London. A lot of this feeling is down to affordability of housing, or more pertinently, the lack of affordable property in the capital. This can be seen in the Hometrack UK Cities House Price Index.
London is an expensive place to buy property
The most recent figures provided by Hometrack suggest that the property price to earnings ratio in London stands at 14.5 times the average earnings. Hometrack suggests that the average cost of property in London stands at £496,000 and that the average salary stands at a level of £34,200. Many people will point out how this salary, or property price, bears no relation to their situation but when you take the average of a city as large and as diverse as London, this is the outcome you will receive.
What is worrying, especially in a time when property prices are slowing in London, is that the ratio is getting larger. In 2015, the property price to earnings ratio in London stood at 14 times the average level of earnings. If you are taking a longer term approach, it appears as though the gap between earnings and house prices in the English capital have nearly doubled in the past 15 years.
With property moving out of reach of so many people, it is easy to see why there is a high level of competition for affordable or suitable accommodation in London. It would be wrong to suggest that this was only a problem for London to contend with though; there are other parts of England that are quite expensive for people.
Other areas are almost as expensive as London
The ratio in Cambridge is almost as expensive as it is in London, with a ratio of 14.3. In Oxford, the other traditional seat of English learning, the ratio stands at 12.6 times. Bristol also ranks as an expensive place to buy property, coming in with a ratio of 10.1. These areas indicate that it isn’t just London that is pricing some people out of the market, but it is important to remember that there are areas in the capital that are suitable to first time buyers.
At Oaks Estate Agents, we aim to provide you with guidance and assistance in the property market. If you are keen to find affordable property options in London, get in touch and we will be more than happy to help you out.