London first-time buyers: is 2025 your year to buy a home?
This year could offer a promising chance for Londoners aiming to enter the housing market, as affordability reaches its best levels in 12 years.
Recent research shows that in 2025, average house prices will be 9.3 times the average income, a significant decrease from 10.7 in 2018 and 10.6 in 2022. After a period of economic instability marked by rapidly rising interest rates, factors like increasing wages, lower bank base rates, and improving mortgage deals in a more stable housing market mean that household incomes will stretch further when purchasing a home in 2025.
“Since peaking in 2015, affordability for housing in London has steadily improved. While average house prices across the capital have generally risen, earnings growth has caught up, bringing the house price-to-income ratio to its lowest level in over a decade,” according to a report by Mitheridge Capital and Oxford Economics.
Deposits for first-time buyers are still exceptionally high, averaging £144,000 (UK Finance), which has turned London’s housing market into a system mainly supported by the Bank of Mum and Dad. However, experts predict that young buyers will start to return to the market this year. The most affordable properties are in Barking and Dagenham, where the average house price is £338,000 (compared to the London average of £520,000), and the typical first-time buyer home costs £320,000, according to the CBRE Borough by Borough report.
