London’s homes haven’t been this affordable in a decade

LONDON homes are now the most affordable they have been since 2014, though they are still by far the most expensive relative to earnings in Britain despite their underperformance.

Data from the online sales portal Zoopla showed that London houses now cost 13 times the average earnings of a United Kingdom worker, down from over 15 times at their peak in 2016. Britain’s departure from the European Union along with tax changes and shifts in house prices and wages were responsible for the move.

The figures show that the London market is slowly cooling after exorbitant growth that pushed house prices out of reach for many younger buyers. Improving affordability could help a recovery in demand in the capital, which has seen lower transactions and weaker house price growth in the last seven years.

The property market in London has been hit by a tax clampdown aimed at investors and foreign buyers along with Brexit and changing working patterns after the pandemic. London house prices have climbed just 13 per cent since 2016, compared to a 34 per cent rise in the UK, according to Zoopla.

However, it’s still by far the most expensive part of the country for homebuyers. Prices in Midlands, North, Wales and Scotland all well below eight times average earnings.

Zoopla’s report confirmed that the housing market started 2024 on the front foot after the cooling in mortgage rates. Sales agreed are up 13 per cent year-on-year with new buyer demand jumping 21 per cent in London. The supply of homes is up by more than a fifth compared to a year ago.

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“It’s a positive start to the year with all key measures of housing activity higher than a year ago,” said Richard Donnell, executive director at Zoopla. “The fall in mortgage rates has led to a rebound in buyer demand and sales following a weaker second half of 2023 when many movers put decisions on hold.” BLOOMBERG