74% of workers in London can't afford to buy a home
Oct 20, 2024
• Zoopla research finds 40% of full-time workers priced out of homeownership across Great Britain
• Over half (58%) of working households in southern England cannot afford to purchase an average priced two or three-bed home
• Almost three quarters (74%) of full-time workers are unable to buy in London
The report finds that 74% of workers living in London are unable to afford to buy an average-priced two or three bed home. More than half of workers (58%) are unable to buy across southern England (South East, South West and East of England).
GROWING POCKETS OF UNAFFORDABILITY ACROSS SEVERAL CITIES OUTSIDE SOUTHERN ENGLAND
The study also finds that the affordability of home ownership is becoming more challenging across a growing number of regional cities outside southern England as growth in jobs and incomes has pushed both house prices and rents higher.
SINGLE-EARNER HOUSEHOLDS AT A MAJOR FINANCIAL DISADVANTAGE
The study explores the affordability of housing for single earners with 57% unable to buy, assuming they buy an average-priced two or three bed home at the lower end of the market (lower quartile price). The unaffordability of home ownership is worse across all regions of Great Britain compared to an average multi earner working household.
Bank of England data for new mortgage lending (MLAR statistics) shows the proportion of single earners buying homes with a mortgage has fallen from 45% in 2007 to 32% today highlighting the squeeze on single earner households.
KNOCK-ON EFFECT ON THE RENTAL MARKET
The unaffordability of home ownership is compounding the pressure on the private rented sector where the total number of rented homes has been broadly static since 2016. The growth in average rents (for new lets) has outpaced house prices since the start of the pandemic (March 2020).
House price growth has been below the UK average across London and southern England as affordability constraints reduce demand and restrict house price increases. In contrast, house prices have grown faster in markets where more workers are priced into the market to buy. Read the full set of results.
27% OF FULL-TIME WORKERS CAN'T AFFORD TO RENT
The study finds that, at a national level, just 27% of full-time workers are unable to afford private rental costs compared to a higher level of 40% for buying. Renting is most unaffordable in London where 67% of workers living in London can't afford the rent for two or three-bed homes, with just under a third (32%) of workers unable to afford rent across southern England.
The research assesses the affordability of housing to rent and buy for working households across Great Britain. The report identifies structural factors that generate higher home values and worse affordability outcomes alongside the implications for Government on how to improve affordability and the types and tenures of new homes required in future.
