Buying property in London: is it still possible?

Living in London is not cheap. That’s not a secret, but millions of people continue to live in the capital to experience everything that the London life brings. Unfortunately, the prospect of owning property feels so distant to many Londoners that they opt to rent instead, but that is also expensive and can make saving for a deposit difficult.

London is one of the most difficult property ladders to climb on, and just like New York or Paris, the average person is being pushed further and further to the outskirts. Furthermore, the average annual cost of rent in London is an eye-watering £26,316, which makes for interesting reading when the UK average salary is £33,000.

So, if the buying and rental markets in London are so expensive, who can afford to live in the capital? And is living in London in today’s economy possible, or is the dream of a life in the capital now just that, a dream? Let’s take a look.

How expensive is it to live in London?

London’s property market is the most expensive in the UK by some distance. According to the UK’s House Price Index, the average price for a London home is £523,666 which may see you needing to earn as much as £125,000 annually to gain approval for a mortgage.

Of course, house prices are skewed somewhat by the high-value properties found throughout luxurious London districts such as leafy Bloomsbury or Fitzrovia, which are often marketed for prices above and beyond £1 million. Many of these properties are bought for cash, but in high-end sales there is a stock shortage, leaving buyers frustrated.

Great deals on the outskirts

With a median salary of £41,866 in London, it’s clear that the average home in the city is financially out of reach for a large portion of Londoners. The good news is that it is possible to live in a home with a London postcode even if your salary falls below the London average.

The property market in zones 3-6 represents the best value for those on income that sits near the London average. But that’s not to say it’s easy to go out and buy a home in London if you earn the median wage, and naturally, those properties are further out plus, like everything in London, there is competition.

However, many businesses now offer hybrid and remote working, which represents a great opportunity to live less centrally and find an affordable place to live that also has great transport links if you want to enjoy the social benefits that London provides.

The most affordable Underground stations to live near

Below is a table that showcases the 10 most affordable stations to live near in London for one-bedroom apartments and the salary required to secure one. Using the TFL journey planner, we have also calculated the estimated journey time to King’s Cross & St Pancras, central London’s busiest station, to act as a reference point. All journeys were selected based on an arrival time to King’s Cross at 8:30 am from the selected stations.

Underground stationLineMedian property pricesSalary neededEstimated journey time to King’s Cross & St Pancras (TFL)
Newbury ParkCentral£135,000£17,40046 mins
RedbridgeCentral£135,000£17,40041 mins
OakwoodPiccadilly£137,000£17,60032 mins
UpneyDistrict£165,000£22,30046 mins
CroxleyMetropolitan£185,000£25,50048 mins
Chigwell        Central£190,000£26,40058 mins
HornchurchDistrict£190.000£26,40058 mins
Wanstead    Central£195,000£27,30039 mins
Dagenham EastDistrict£195,000£27,30053 mins
Dagenham HeathwayDistrict£200,000£28,00051 mins
10 lowest median property value areas by tube stop, according to Totally Money.

Buying together

The majority of the cheaper places to live above are in east London but the prices are reflective of one-bedroom apartments. Of course, this is also working on the basis that you are a single person. Combining your purchasing power with your partner can significantly improve the affordability of living in London.

Co-living is a great way to keep costs down, certainly for renting, but also for buying. When buying a home with someone else, most of us envisage that person being our significant other but there is nothing to stop us also buying a home with a close friend or even a sibling to help make things more affordable.

Of course, this won’t be a permanent solution but it can help you overcome the biggest hurdle of all – getting onto the London property market in the first place!

The most popular places to buy in London

According to estate agents Benham and Reeves, the busiest housing markets in London are Havering, Bromley, Wandsworth, Richmond-upon-Thames, and Lambeth. With many of these boroughs placed in the outer zones of London, it makes sense that most people buying and selling in London are found in these areas.

The mix of boroughs on the outskirts like Bromley or Havering would suggest that many people are looking to move to the more affordable areas of London, however, Richmond and Wandsworth are not particularly known for being cheap. It just goes to show that there are plenty of people moving in and out of London, whether they are seeking a bargain or looking for something more exclusive.

Can you get help to buy a home in London?

Up until 2022, first-time buyers could rely on the Help to Buy scheme that allowed people to borrow up to 40% of the value of a new build house in London with no interest to pay for the first five years. That scheme ended last year and the next best alternative is the Lifetime Individual Savings Account (LISA), which you can use to buy your first home.

The scheme allows you to put up to £4,000 per year into the account and the government will add a 25% bonus to your savings in the same period, meaning you could earn 25p for every pound you put in. There is a penalty for making withdrawals from your LISA but these are waived if you are putting the money towards a deposit for your first home.

Shared ownership is a more affordable way to buy a home but you will only own a portion of it, with rent also then required to be paid to the council or a housing association. You will need a mortgage to cover the portion that you own but over time you will be able to buy up to 100% of the property to make it your own.

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