The minimum salary for a first time buyer to own a London flat just hit a horrific level
While more and more Britons are struggling to buy a home across the country, the lack of supply has created a severe housing shortage and therefore boosted prices to record growth rates.Depressingly, new research by price comparison website Gocompare.com just revealed that first time buyers need a minimum salary of £140,000 (£213,047) to even get on the ladder.Advertisement
Yes, that's right - that's quadruple the median average salary in the capital of just £30,338.
Go Compare looked at the minimum first-time buyers need to earn to get a mortgage based upon a 90% mortgage with a standard 4.5% interest rate over 25 years. Go Compare used Net Salary Calculator and UK Salary Calculator to estimate gross annual salary figures.If Londoners, who are buying for the first time, wanted to buy a terraced house, the household would have to earn a combined salary of £142,000 a year in order to get on the ladder. Buying a detached property in the capital as a new property owner also seems completely unfeasible if Go Compare's figures are anything to go by - the household would have to earn a huge £275,000.
The data probably doesn't seem like a surprise to those who watch the British housing market closely.
The average price of buying a property in Britain is £284,000 ($431,874), according to the Office for National Statistics. But London is the worst. The average price for buying a property in London is now at £522,000 ($793,849).It's little wonder why the minimum salary to buy a property in London is so high because with a minimum 10% deposit, then stamp duty, plus being able to withstand the Bank of England's loan-to-income ratio test, means households need to be super financially liquid.Advertisement
The BoE stress test makes banks only lend to customers who are able to stand a rise in interest rates and that the mortgage needed was no more than 4.5 times the salary.
This week, the Royal Institution of Chartered Surveyors said in its RICS Residential Survey for Octoberthat UK house prices are expected to rise by 4.5% per annum over the next five years (a cumulative increase of around 25%). The chief economist at RICS said that property will become increasingly "unaffordable" during this time.So it looks like if you're a first time buyer looking to get on the property ladder, it may be worth doing it as soon as possible because prices aren't going to go down any time soon. If you want to see exactly where the most affordable place to buy a property in Britain is, then check out this chart:Advertisement
- Rupee jumps 27 paise to close at 75.15 against US dollar
- Google to pick 7.7 pc stake in Jio for Rs 33,737 crore
- All Punjab ministers to undergo coronavirus test
- Skill India mission played major role in boosting spirit of entrepreneurship in last 5 yrs: Shah
- Taiwan Masters golf 2020 cancelled due to COVID-19