Londoners need £87,000 salary to buy average price property

The average Londoner would need to triple their salary to £87,000 to buy an average price property in the capital, according to a report launched Wednesday by the National Housing Federation.

‘Home Truths London’ shows that the average property costs £408,384 with the average income at £27,128. A salary of £87,511 is needed to obtain a 75% mortgage with the deposit alone topping £100,000.

Federation assistant director Kate Dodsworth said: “An entire generation has been locked out of a broken market. The housing crisis should dominate next year’s mayoral election as Londoners face their own Olympian struggle to find a home they can afford. `

“We need a reformed planning system that supports the building of affordable homes and the use of suitable surplus public land to build on. Ministers should make a renewed commitment to building the homes we need and identify housing as a key driver for economic activity. The battle to house London is being lost every day and the only answer is more affordable homes.”

Launched at the House of Commons, Home Truths also showed:

• The average house price-income ratio is 15.1, meaning that Londoners would have to save every penny of pre-tax salaries for 15 years to buy the property
• Buying a lower value home - a property in the bottom 25 percent of prices - requires an average salary of £46,000 
• Only four London boroughs have an average house price under a quarter of a million pounds (Barking and Dagenham, Bexley, Newham, Waltham Forest).  Barking and Dagenham is the only borough under £200,000
• Over 800,000 Londoners are on the social housing waiting list with 237,000 households living in overcrowded conditions, causing great misery at a time when housing benefits are being slashed and unrealistic caps imposed
• The average cost of a home in Kensington & Chelsea is now £1.24m, up £210,000 on the previous year, and more than five times the price of a home in the Olympic borough of Newham
• Private sector rents have risen 30% since 2008 and are expected to rise by a further 20% in the next 5 years. 

Dodsworth said: “London has become unaffordable for ordinary hardworking Londoners who have no realistic chance of buying their own house, triggering even greater demand for good social housing or a desperate search for a home in the more expensive private rented sector. The need for new social rented family housing has never been greater.”

East Thames Chief Executive June Barnes said: “The NHF Home Truths figures highlight that demand for good quality, affordable housing is higher than ever. East Thames has around 13,300 affordable homes and we will be delivering another 2,498 new homes in the next four years, but we want and need to do more. It’s important that people across generations are able to afford their own home, with the choice to live in a community that’s close to friends and family.

“A significant opportunity coming up for Newham residents who are interested in buying their own affordable home is the 269 homes for shared ownership available on the Athletes Village after the 2012 Olympics. We’re part of Triathlon Homes who will transform 1,379 homes on the Village into affordable options for local people, which also include 675 homes for social rent and 365 homes for intermediate rent.”