| First-time buyers need a £70,000 cash pile to get on the property ladder in the capital, as rising house prices put London living out of reach for many.
Research from real-estate adviser, JLL, shows that those making their first foray into the housing market need such a big sum to cover the deposit, 3pc stamp duty, and moving costs. With loan-to-value mortgages at 82pc in London, individuals – typically in their early 30s – and young families must find a deposit of around £50,000, which could deter talented staff from settling in the city.
Newcomers buy a flat or terraced home worth an average of £280,000, said JLL, a level that would incur stamp duty at 3pc, costing £8,400. Typical moving costs add up to between £10,000 and £12,000.
“London house prices are underpinned by strong fundamentals, including strong employment prospects and expectations of future wage growth,” said Adam Challis, head of residential research for JLL.
“There is such strong demand from young professionals to live and work in London that huge compromises in living circumstances are made. Strong rates of price growth are also driving more people to feel the need to buy now or miss out.”
He added that “a price correction is unlikely, as there is no fundamental reason on the horizon for this demand to wane over the medium-term”.
Lending conditions are expected to tighten following the Mortgage Market Review, drawing up new rules which are due to come into force this week.
However, high prices and associated costs are confirming fears that centre of London has already become a playground for wealthy overseas investors as workers and families migrate to the commuter zones and out into the Home Counties.
“We are seeing what amounts to an Upstairs, Downstairs market, with the gentry residing in the best bits and ordinary folk having little choice but to inhabit the fringes,” said Russell Quirk, founder of online estate agent, eMoov.
Elsewhere in the UK, moving house is costing homeowners a total of £6.6bn, up 27pc from £5.2bn a year ago, according to a new study from Lloyds Bank.
Over the past decade, the total cost of moving has increased by 22pc compared with house price rises of 31pc, the bank found, costing each mover £8,428, or a quarter of average national earnings.
Moving house for those living in London and the South East is even more expensive, with the average cost now significantly higher, at £20,825 and £16,187 respectively. Higher property prices drive these increases: the average mover in London pays £10,850 in stamp duty and £6,510 in estate agency fees.
Significantly, the cost of moving in London is equal to nearly half of the average gross full-time earnings (£43,866) of London residents.