Average cost of deposit for first-time buyers in London? A record £60,000

 
File photo dated 12/10/2010 of For Sales signs. The number of potential home buyers looking to view properties dipped in August as the Olympics provided a distraction - although overall sales held firm, surveyors reported today. PRESS ASSOCIATION Photo. Issue date: Tuesday September 11, 2012. In the three months to August, chartered surveyors sold on average 7.5% of the homes on their books per month, a figure which has remained consistent throughout 2012, the latest RICS UK housing market survey said. See PA story ECONOMY House. Photo credit should read: Rebekah Downes/PA Wire
Rebekah Downes/PA Wire

Stretched first-time buyers in London were forced to stump up record deposits averaging almost £60,000 last year.

The huge and “incredibly unfair” scale of the task facing young Londoners wanting to scramble onto the property ladder was revealed in latest figures from the Council for Mortgage Lenders.

Last year, the typical first-time buyer in London paid an all-time high of £237,600 for their home, funded with a mortgage of £178,200 and a cash deposit of £59,400, or 25 per cent.

Paula Higgins, chief executive of HomeOwners Alliance, said: “Buying a home in London is open only to those with wealthy relatives and people who win the Lottery.

“This is robbing a generation of any prospect of getting onto the housing ladder and it’s incredibly unfair. First-time buyers should be providing the life blood of London’s housing, and need more support than ever.”

The size of the cash piles that “wannabe” owners have had to accumulate to purchase their first flat or house has increased dramatically since the financial crisis.

In 2007, the last boom year before the banking crash, the average deposit was £23,483, representing 11 per cent of an average purchase price of £213,483. As recently as 1995 the average deposit in London was less than £3,000, or five per cent.

But with prices still rising in London some experts have forecast that deposits could break the £100,000 barrier by the end of the decade. However, five years after the mortgage market went into deep freeze following the collapse of Lehman Brothers there are signs that more young buyers have now squirrelled away enough cash to access home loans, often with help from their parents.

The number of first-time buyers in London rose 15 per cent last year to 37,300, the highest since 2007, according to the CML.

Mortgage experts said there had also been a steady increase in the number of banks and building societies prepared to offer 90 per cent mortgages in recent months, although these are still only available to borrowers with spotless credit records.

Jonathan Harris, director of mortgage broker Anderson Harris, said: “The mortgage freeze is finally thawing with the welcome return of first-time buyers to the London market illustrating that funding conditions are improving.

“The Funding for Lending Scheme is helping push down mortgage rates, as well as provide more choice for those requiring higher loan-to-values.”

The CML figures also show how London buyers are disproportionately hit by the stamp duty “tax on housing”.

For the United Kingdom as a whole, about 40 per cent of first-time buyers paid less than the £125,000 threshold for stamp duty compared with just four per cent in London. One in 12 first-time buyers in London paid more than £500,000, meaning they had to hand over at least £20,000 to George Osborne.

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