Within days of posting my first blog, the London Evening Standard ran a front page headline which read “£100,000 deposit to buy first home”. This astonishing conclusion was the result of research carried out by Oxford Economics who predict that London property prices will just keep on rising and by the year 2020 the average price will be £489,214.
Even if it was possible to amass £100,000 for a deposit, one would still need to obtain a mortgage of nearly £400,000 to buy the ‘average’ house. Given that most lenders have now come to their senses; it is no longer possible to borrow much above four times annual earnings. This means a salary of around £100,000 a year would be required to qualify for the mortgage.
We talk of the human race progressing in many areas but when it comes to something as fundamental as housing we seem to be fast tracking back to the Victorian era; a wealthy property owning elite providing expensive, insecure short term rental accommodation for the rest of us.
The current influx of foreign money and the influence of ‘The City’ is keeping London’s property bubble inflated. All bubbles though, must eventually burst.