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Everything You Need To Know About Housing In London Today

Each year we read hundreds of headlines stating ‘house prices rise’ or ‘house prices fall’ – but which headline is accurate? We’re going behind the headlines to provide an insight into what’s really happening in the London property market today.

With various surveys about London housing conducted each year, we’ve taken a look at the findings and rounded up the most interesting stats for your perusal. The results from the English Housing Survey provide an insight into the type and condition of housing available, the demographics of those living in different types of London housing, the affordability of homes in London and the aspirations of those living in the city when it comes to homeownership.

Housing in London

First-time buyers

What the newspaper headlines have been saying is true – the number of first-time buyers is down (compared to 20 years ago). First-time buyers are older and ‘increasingly likely’ to live in privately rented accommodation before they buy.

  • Two-thirds of first-time buyers put down a deposit that was less than 20% of the purchase price
  • First-time buyers in London pay an average deposit of £94,088
  • The average age of first-time buyers has increased from 30 years old in 2006-07 to 33 years old in 2016-17

With house prices and deposits higher than ever before, it’s no surprise that first-time buyers are seeking help from family. In 2015-16, 29% of first-time buyers had help with their deposit from friends and family. This increased to 35% in 2016-17.

Private rented sector

The private rented sector is the second largest tenure in England, with 4.5 million households renting in the private sector.

  • The average weekly rent in London was £309
  • On average private renters in London spend 45% of their income on rent
  • On average it costs less to have a mortgage than to rent in the private sector in London – outside of London private rents are similar to mortgage repayments
  • In 2006-07, 27% of people aged 25-34 lived in privately rented accommodation. This increased to 46% in 2016-17.

The number of families in the private rented sector has grown significantly. Households with dependent children living in the private rented sector have increased to 36%, up six percentage points from 10 years ago.

Housing costs and affordability

Households in London ‘spend a greater proportion of their income on housing costs’ irrespective of tenure than households in the rest of England.

  • Homeowners in London spend 22% of their household income on mortgage payments on average
  • Social renters, private renters and mortgagors in London all spend a greater proportion of their income on housing than those living in the rest of England
  • The average weekly mortgage payment in London was £228
  • In 2006-07, 72% of those aged 35-44 owned their own homes. The 2016-17 survey showed that this had dropped to 52%.

The survey found that households with a mortgage had the highest incomes, whilst social renters had the lowest.

Future homeowners

This initial report has shown us that between 2014-2015 and 2015-2016 the percentage of people in privately rented accommodation who expected to be able to buy their own home remained at 59%. However, the number of people living in social housing who expected to be able to buy increased from 24% in 2014-15 to 27% in 2015-16.

  • In London, 25% of people living in privately rented accommodation expect to be able to buy within the next two years
  • The number of people being priced out of London housing who are currently renting privately increased from 56% to 70%

Private renters who did not expect to be able to buy their own home listed affordability as the main issue. However, it is worth mentioning that not everyone wants to own their own home; 10% of renters were happy with their current homes, with 3% preferring the flexibility of renting.

Mortgagors

  • 69% of people with a mortgage spend less than 20% of their income on their home
  • 97% of people who owned a home with a mortgage said they’re satisfied with their housing situation, compared to 67% of those renting privately
  • The average amount being borrowed has increased from £59,000 from 21-25 years ago to £158,000 in 2015-16

A growing number of older buyers are buying property with a mortgage compared to previous years. It’s likely that mortgage age limits will increase over time to reflect this.

People’s perception of their neighbourhoods

When it comes to people’s perception of where they live you obviously get differing views dependant on a person’s situation. With that in mind, here are a few key stats:

  • 88% of Londoners are ‘satisfied’ with their neighbourhood
  • Owner occupiers had a higher satisfaction rating (90%) than renters (87%)
  • 95% of people claimed to feel safe walking alone during the day, and 67% felt safe walking alone in their neighbourhood at night

How someone views their neighbourhood is often affected by how long they have lived in the area. Those that had lived there for 10 years or more were found to view the area more negatively and suggest it had gotten worse compared to those who had lived there for shorter periods of time.

What’s next for housing in London?

The National Housing Federation has reported that by 2039 the number of people living in England will increase by 17% with significant differences in the increase of the population in different age ranges. The largest population increase has been predicted to be people aged 65 and over.

The increasing trend of younger generations either choosing to rent or not being able to afford to get on the housing ladder suggests that homeownership is going to become the realm of the older generations who already own a larger share of housing wealth. A large proportion of these high housing wealth owners are located within London and the South East.

  • According to the English Housing Survey 2016-17 the number of owner occupiers has not changed since 2014
  • There is now an increased number of owner occupiers who own their property outright compared to people with mortgages
  • The number of owner occupied homes that are under-occupied has increased from 39% in 1996-97 to 51% in 2016-17

Sources: 

  • English Housing Survey – access here
  • National Housing Federation – access here