A new index has shown that it’s harder to buy a home in London than it was in 2010. Property expert Simon Morris explores what this could mean for investors looking to enter the UK capitals residential property game.
London house prices shoot up over the last five years
London is one of the most desirable cities to live in on the planet. The Greater London Authority has revealed that the city has a population 8.6 million and has predicted that this will rise to 11 million by 2050.
London has always been an expensive place to live; that’s why take home wages in the UK capital are higher on average than take home wages in the rest of the country. However it has become increasingly more expensive to get onto the London property ladder in the last half-decade. Data from Rightmove shows that the average price of a home in the city is now 27.5% higher than it was in 2010.
It’s 77% harder to buy a home in London
Does this mean that it’s harder to get onto the property ladder in the UK capital now than it was five years ago? This is a complex question. It involves weighing up a number of factors including house prices, wages and living costs.
Hamptons International’s ‘ability to buy’ index takes these factors and more into account to determine how hard it is to buy a home in London. The index has recently shown that it’s 77% harder to buy a home in the UK capital now than it was in spring 2010.
Why is it harder to buy a home in London?
London is a unique market. It cuts a stark contrast with the rest of the country. The index showed that it’s actually 2% easier to buy a home in the rest of the UK now than it was in spring 2010.
Fionnuala Earley, the residential research director at Hamptons who authored the survey, noted that it’s also 73% harder to buy a home in London now than it was at this point in 2014. Earley commented that “despite some of the lowest mortgage rates on record, falling food and oil prices and some increase in wages, ability to buy is (now) worse than this time last year. This is largely a result of house price growth outperforming incomes.”
Should you invest in the London residential property market?
This presents you with some tough questions if you’re looking to invest in the London residential market. Ultimately, you need to ask yourself if there are buyers who are willing to plough capital into homes in London. Alternatively, you might want to look at how you can invest cheaply in the London residential market to ensure you generate a decent return for your capital.