First-time home costs 'blighting lives'

Shut out: Sam Brookes would like to buy but does not earn enough
Ruth Bloomfield12 April 2012

Young Londoners keen to get on the housing ladder need to earn a minimum of £31,714 to afford an average starter home in the cheapest postcode in the capital.

In more expensive parts of the city they would need an income of up to £80,000 to be able to get a modest toehold on the property ladder, according to the National Housing Federation.

Its report, Home Truths, found that to secure a first-time home priced at £148,000 in Barking and Dagenham, the cheapest borough in the capital, would require a salary of almost £32,000.

This figure is based on taking on a 75 per cent mortgage, so they would therefore also need to scrape together a deposit of almost £8,000.

In Westminster, a starter home costs £380,000 - meaning would-be buyers need both an £81,429 salary and savings of around £95,000, assuming they borrowed at the recommended rate of 3.5 times annual salary.

A first-time buyer with an ambition to live in Greenwich, where starter homes cost around £190,000, would need a salary of just over £40,000 and a deposit of more than £47,000.

To live in Hackney, where average starter homes cost £225,000, they would need to earn £48,124 and a deposit of more than £56,000.

And, in more bad news for beleaguered would-be homeowners, a report by financial advice firm Investorbee.com has found that an average London worker, saving 10 per cent of their salary, would need to wait 19.6 years to buy an average-priced home. "High housing costs are blighting lives in London," said Kate Dodsworth, assistant director at the federation.

"The average house price in London is now double that for the country as a whole and prices in London continue to rise, despite falls elsewhere.

"Moreover, since 2008 private sector rents have risen 30 per cent. Far too many workers cannot afford to buy or rent a decent home on the open market, and the social rented sector is struggling to cope with the severe demands placed on it.

"Overcrowding, homelessness and social housing waiting lists are all increasing - sure signs of the strain on people's finances and lives."

'Even in the recession prices have stayed the same in london'
Sam Brookes is an aspirant first-time buyer who would love to buy a property but his salary will not allow it.

Mr Brookes, 24, works in business development and is sharing a flat in Aldgate. His £600-a-month rent makes serious saving for a deposit "almost impossible". Although his parents are supportive, he is reluctant to ask them for tens of thousands of pounds for a deposit. "I want to be able to stand on my own two feet," he said.

He earns slightly below the London average salary of £27,128, putting starter homes in even the most far-flung boroughs beyond his reach. "Why do I want to buy a home? I think that the British have a massive affiliation for buying rather than renting, and I would also look to do it from an investment point of view," he said. "Even in the recession prices have stayed about the same in London."

Although Mr Brookes would prefer to stay in central London - with Angel, Shoreditch and Aldgate among his top choices - he would "definitely" be willing to compromise and move further away. "But even if I did that I am still not going to be in a position to buy," he said.

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