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Homebuyers in London Paying 170% More in Deposits than the Rest of the UK
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The average deposit for a property in Greater London is almost three times, or 170% more, than in the rest of the UK, according to new research.
Over the past three years, the average deposit in London has risen by almost £30,000, or 30%, reaching a huge £127,000, says the report from My Home Move.
However, the average deposit size as a proportion of purchase price for the UK as a whole has fallen by 1.8% since 2013, but home movers’ deposits remain high, as house prices continue to rise.
Homebuyers in London Paying 170% More in Deposits than the Rest of the UK
My Home Move’s data shows that nationally, the average property price in 2013 was £162,040, requiring a deposit of £44,690. In 2014, the average home cost £173,202 with a deposit of £45,534, rising to £182,293 and £46,976 in 2015.
Contrastingly, the average house price in Greater London was £377,855 in 2013 with a deposit of £99,375, up to £439,399 in 2014 and a deposit of £112,266, and a huge £482,512 in 2015, requiring a deposit of £127,141.
In the UK as a whole, the deposit needed in 2013 was 27.58% of the purchase price, falling to 26.29% in 2014, and dropping again to 25.77% in 2015. However, in the capital, a buyer needed a deposit of 26.3% of the purchase price in 2013, 25.55% in 2014 and up to 26.35% in 2015.
The CEO of My Home Move, Doug Crawford, states: “The London property market has always commanded greater prices than anywhere else in the UK, but our research has shown just how extreme the situation is becoming.”
He notes that London property prices have increased by 27% in the past three years, and while the rest of the UK has experienced a small decline in deposit size, those seeking a home in London are paying 170% more in deposits than other UK buyers.
“This situation is unsustainable and has been driven by rising house prices. For some, their deposit will come from the equity in the property they are selling. However, for many, they will still need to save tens of thousands of pounds to make the move onto and up the property ladder,” he says.
“Ultimately, it still begs the question: Who is going to help those looking to enter the capital’s housing market and those on the lower rungs of the ladder, first time buyers and second steppers?”1
He points out that earlier in the year, My Home Move predicted that 100,000 properties would be purchased in 2016 using gifted deposits from buyers’ parents. Based on these figures, it seems that a very large proportion of these could be based in Greater London.
However, recent research does suggest that the London property market is running out of steam.
1 http://www.propertywire.com/news/europe/uk-buyers-deposit-research-2016041811807.html
