Young people are quickly giving up hope of ever being able to afford to buy a home in London. Property prices in some parts of the capital are more than 10 times average salaries.
Typically banks will lend up to five times your salary for a house purchase, but they have become much stricter and risk-averse since the coronavirus outbreak, taking mortgages for buyers with small deposits off the market.
But there are still pockets of affordability. Exclusive research by Savills, the estate agency, and property website Zoopla, has pinpointed the best places for first-timer buyers to find a home in the capital.
Average price for a flat or terrace: £152,798
The most affordable place for young people to get on to the property ladder in London is Kenton in the borough of Brent, according to Savills’ analysis of data from Experian, the credit agency. The estate agency compared average incomes of 18 to 30-year-olds living in each ward in the capital to the price of a typical flat or terraced house in the area.
In Kenton, which is just to the east of Harrow, the average starter home costs just under £153,000. Young residents in the area earn on average £65,000 a year – meaning they’d have to spend just 2.35 times their salary to buy a home in the area, much less than in most parts of the capital.
Local Tube stations are Kenton and Northwick Park, which are on the Bakerloo and Metropolitan lines.
Kenton West, which is nearby but over the border in Harrow, is also a good bet to find affordable homes. A typical flat or terrace here costs £164,500 while local young people earn a healthy £68,000 a year on average, meaning they have to stump up just 2.42 times their earnings to get on the ladder.
In some of the priciest spots in the capital for young people – the areas around St Pancras train station in Camden and between Pimlico and Sloane Square stations in Westminster – starter homes cost between nine and 10 times local salaries of 20-somethings.
Average price for a flat or terrace: £112,254
The second most affordable ward was Goodmayes in the borough of Redbridge. It sits quite far from the centre, about six miles further east than the Queen Elizabeth Olympic Park in Stratford, but has very affordable homes. Local 18 to 30-year-olds typically earn around £47,000 a year, so can buy a home for just 2.4 times their salary.
Goodmayes is part of the town of Ilford but has its own station where fast trains take you into Liverpool Street in 23 minutes. There are a number of local schools, including Christchurch Primary and Beal High School which are rated "outstanding" by Ofsted.
Hayes and Coney Hall, Bromley
Average price for a flat or terrace: £158,056
The area covering both Hayes and Coney Hall in south-east London is slightly less well connected, with trains from Hayes to Charing Cross taking about 45 minutes.
Hayes itself has quite a villagey feel, with a small high street, some old cottages and a knoll with a pond. Starter homes cost around £158,000 – very affordable for the average 18 to 30-year-old who earns on average a little over £65,000. This works out to just 2.4 times their earnings.
Island Gardens, Tower Hamlets
Average price for a flat or terrace: £244,590
A little less affordable but much closer to the centre of the capital is Island Gardens. The area is a haven of green in east London, with Mudchute city farm to the north and sprawling Greenwich Park just across the river to the south. Here, a first home is much pricier, at almost £245,000; however, this is matched by higher salaries among young people in the area who pay just under 2.5 times their earnings to buy a home.
Where can you get a helping hand from the Government?
The Help to Buy scheme in London allows you to put down a deposit of just 5pc on a new-build home and take out a cheap government loan to cover another 40pc of the total cost. In the rest of the country you can only get loans of up to 20pc.
You can find out more about the scheme and how it can help first-time buyers in Telegraph Property’s ultimate guide to buying your first home. The scheme is being tapered, with regional price caps added from April 2021.
Without a Help to Buy loan, most mortgage lenders are now requiring first-time buyers to put down deposits of at least 15pc because of fears about job losses during coronavirus. This means the scheme has become a lifeline for many who cannot afford to stump up thousands of pounds extra for their deposit.
However, the supply of homes is unevenly spread across the capital. In some boroughs there are just one or two properties available to buy through the scheme. Zoopla has identified the key hotspots for young buyers which have the highest concentration of Help to Buy homes.
Average house price: £371,358
The local authority with the highest percentage of Help to Buy homes currently listed on Zoopla is Croydon. Almost 16pc of all the homes in London which can be purchased using the scheme are located in this borough. The area is popular with commuters, thanks to the speedy trains that take you from Croydon to central London in just 15 minutes.
It is also undergoing rapid transformation, including a £1.4bn scheme to regenerate Croydon town centre.
Average house price: £509,812
Not only does Brent have pockets such as Kenton where homes are particularly affordable, it also has a high proportion of London’s new-build Help to Buy properties; just under 10pc of all those currently available on Zoopla.
It has wide green spaces, such as Fryent Country Park and a reservoir, known as the Welsh Harp, which is popular with sailors. Although larger homes can be pricey, flats in the borough cost on average around £275,000.
Next best after Croydon and Brent for buyers with small deposits are the boroughs of Hillingdon and Barnet. They have around 9pc and 7pc of London’s Help to Buy homes respectively, and average property prices are £447,457 and £628,281, according to Zoopla. Flats cost approximately £255,272 and £342,811.