First time home buyers need to earn at least £77,000 a year
05 May 2015
Londoners who hope to own a home in the city need to earn a whopping £77,000 a year to be able to buy their first house, according to a new KPMG report.
Getting on the property ladder in London was now much harder than ever with first timers now needing to earn almost double the £41,000 minimum national average income to buy a home, according to the report.
This meant Londoners had to earn almost three times the median annual wage in the capital of £28,000 in order to be able to put down a deposit of 10 per cent and a loan at 4.5 times salary.
According to KPMG, the new figures meant that buying a home in London was unobtainable for almost everyone except those with a far higher than average wage, or who came into inheritance.
The report laid down the costs of buying a first home across the country, with the gap between the wage needed and the average wage being the smallest in the north east.
The average wage there was £20,149 while an income of £23,616 was needed to make a purchase.
According to Jan Crosby, the head of housing at KPMG, the figures made for frightening reading and showed that housing affordability was no longer just a problem for lower wage earners.
According to the report, across the UK, a first-time buyer needed a minimum income of £41,000.
With the election only a few days away, the consultancy has called for an apolitical long-term housing strategy to tackle the worsening housing crisis.
The KPMG report comes as analysis showed a 64-per cent increase since 2010 in new mortgage lending that would be viewed as risky by the Bank of England. Accountancy firm Moore Stephens said, around 88,817 mortgages were lent at 4.5 times salary above last year, and against 54,023 in 2010.
The annual wage of around £77,000 needed by a first-time buyer in London compared with the average annual wage in the capital of just £27,999. Across the country, a first-time buyer needed earnings of £40,553 to get on to the property ladder, against an average wage of £22,044.
According to a KPMG-commissioned poll, 69 per cent of people felt there was not enough housing in the UK that was affordable, with nearly a third concerned about they would afford or continue to afford their own home, or pay their rent.