Affordability ratio: London first-time buyers spend 13 times earnings for first home, according to latest figures

The gap between the price of a first home and average earnings widened again last year according to the latest figures. 
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Homes are increasingly out of reach for first-time buyers in London despite falling property prices, an official report revealed today.

The Office for National Statistics said the “affordability ratio” — which measures the difference between incomes and house prices — rose for first-time buyers in the capital last year because the cost of the cheapest homes was growing faster than earnings.

It means that young Londoners would now have to spend 13 times their earnings to get on the property ladder.

The disclosure will be a blow to those searching for their first home and comes despite recent statistics showing a fall in overall house prices in London.

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Much of that decline has been in central London, involving high-end properties, with today’s analysis showing that the trend has not been replicated at the cheaper end of the market.

“The increase in the prospective first-time buyer affordability ratio in London has for the most part been driven by increases in lower-quartile house prices,” the ONS says.

Its statisticians added: “Lower quartile house prices in London increased proportionately more than earnings in 17 of the last 18 years, which contributed to the worsening of prospective first-time buyer housing affordability.”

Affordability ratios are calculated by the ONS by measuring the average price of the cheapest 25 per cent of houses against median workplace earnings.

First-time buyers are defined as those aged 22 to 29.

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