First-time buyers face £1m London home

Amid forecasts that the UK housing market is due for a “period of correction” Stroud & Swindon, the building society, has calculated that in ten year’s time first-time buyers in London will need approximately £1 million to buy a home.

The figure is based on house price growth in the capital for first-time buyers between 1997 and 2007 and uses the same rate of growth for the next 10 years.

According to Stroud and Swindon, first-time buyers purchasing property outside the capital will face a similar situation by 2024.

In the past 10 years, salaries have only increased by 35% but the average house price in England has escalated by 135%, so it can be argued that the calculations are realistic.

In addition, the National Housing Federation (NHF) predicts that the cost of the average UK house will have increased by 40% by 2012, to £302,400.

A spokesperson for the NHF commented that their projections show that buying a house in this country isn’t going to get any easier, with many discovering that the only way of getting onto the property ladder is via a housing association.

Hopefully, some action will be taken to reduce stamp duty before prices escalate to the figures forecast.

According to property search engine Zoomf.com, the average price of a one-bedroom flat in central London is now £263,253.

First-time buyers in the capital therefore face a stamp duty bill of £7,898 on average, an increase of 807% since 1997.

When added to a typical 5% deposit, the total needed by first-time buyers to get on the property ladder is £21,000, not taking into account legal fees, removal charges and the costs involved in setting up home.

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