The capital has seen the biggest improvement in affordability across the UK in the last year with the house price to income ratio dropping from 14.5, according to research by Yopa.
But, before you start scrolling the property portals, a reality check.
Most mortgage lenders will only lend a maximum of 4.5 times a buyer’s salary, so that represents a hefty deposit that would be needed by the average buyer.
The second least affordable region is the South East, where the current house-price-to-income ratio is 10.8, followed by the East of England where it’s 9.9.
At the other end of the spectrum is the North East, where the average property price is 5.6 times the average salary, an increase of 0.1 on last year.
The least affordable areas in London
The capital accounts for 12 of the 20 least affordable areas in the UK, with the Royal Borough of Kensington & Chelsea topping the list.
Here, the average house price is £1.18 million, which is 25.2 times the typical local salary of £46,690.
Incredibly, this is an improvement on last year’s figures which put the affordability ratio much higher, at 30.0.
The second least affordable area in the UK is Westminster, where residential areas include Pimlico, Marylebone and Belgravia.
According to the research, it has a 19.5 ratio, with an average house price of £880,000 and an average salary of £45,172. Here, again, affordability has improved from 22.5 last year.
Third on the list is Camden, which encompasses Kentish Town, Hampstead and Bloomsbury, with an affordability ratio of 17.8, average salary of £44,088 and house price of £783,812.
Haringey to the north, with diverse areas ranging from leafy Highgate and Muswell Hill to the more built-up Tottenham and Wood Green, was tied with Richmond-Upon-Thames on the Thames, in joint fourth place, both with ratios of 16.7.
Most ‘affordable’ London boroughs
In terms of the most affordable London boroughs, Tower Hamlets topped the research, with an affordability ratio of 10.3, average house price of £463,527 and salary of £45,183.
The borough has become more affordable in the last year, having dropped from 12.9 in 2024.
Croydon, on the outskirts of London and famed for Crystal Palace, West Norwood and Purley, was the second most affordable place to buy, with a ratio of 10.6, average house price of £402,126 and salary of £38,080.
Its affordability ratio is unchanged from last year. Barking & Dagenham, close to the Thames Gateway in Outer London, was third on the list with a ratio of 10.7, while Havering and Bexley – last year’s most affordable borough – were in joint fourth place with an affordability rating of 11.1.
“While it’s encouraging to see affordability improve across many parts of Britain, it’s important to recognise that this has largely been driven by stronger earnings growth rather than any meaningful reduction in house prices, which remain high by historic standards,” said Verona Frankish, Chief Executive Officer at Yopa.
“London is a good example of this as, although affordability has improved over the last year, the average home still costs close to 14 times the typical salary, which underlines just how challenging it remains for many buyers.”
The outlook for London first-time buyers
While the numbers point to an increase in affordability, lenders will only lend multiples of four-or-five-times an income – less than half of what is required in even the capital’s most affordable hotspots.
Halifax recently estimated that a first-time buyer in London would need a deposit of £125,000 to get on the property ladder.
On top of this, they also need to budget for stamp duty, legal fees and moving costs, all while meeting their everyday expenses of rent, travel costs and bills.
“Last summer there was talk of introducing a deferral option for stamp duty, allowing first-time buyers to spread the cost rather than pay it all on completion.
“It was an idea that really resonated because it addressed the cashflow pressure buyers face in that moment, but it ultimately did not materialise in the Budget,” says Nina Harrison, buying agent at Haringtons UK.
“The end of Help to Buy has also left a noticeable gap. The scheme helped a whole generation get onto the ladder, particularly those without family backing, but it was not perfect…
“If a new scheme does emerge, it needs to be more carefully designed, with a strong focus on ensuring buyers are paying genuine market value rather than a price shaped by the incentive itself.”
