Buyers may have been benefiting from falling average deposits nationally, but that is not the case for London transactions where purchasers are paying almost three times more to get on the property ladder, research shows.
Data from conveyancers My Home Move has found that while the average deposit size nationally last year fell from 26.29% to 25.77%, in London this has actually gone up from 25.55% to 26.35%.
The research looked at 60,000 transactions that My Home Move worked on and compares them against Land Registry data.
The average property price in 2015 was £182,293 while the average deposit was 25.77%, or £46,986.
In comparison, in the capital the average property price in 2015 was £482,512 and with an average 26.35% deposit, buyers were paying £127,141.
This works out at 2.7 times more than the amount buyers put down nationally.
Doug Crawford, chief executive of My Home Move, said: “The London property market has always commanded greater prices than anywhere else in the UK, but our research has shown just how extreme the situation is becoming.
“London property prices have risen by 27% in the last three years and while the rest of the UK has seen a small decrease in the average deposit size, those looking for a London home are depositing 170% more than their UK counterparts.
“This situation is unsustainable and has been driven by rising house prices. For some, their deposit will come from the equity in the property they are selling. However, for many, they will still need to save tens of thousands of pounds to make the move on to and up the property ladder.”
Comments (5)
Is it necessarily bad news?
The absolute value of the deposit is simply proportional to the value of the property.
The relative value of the deposit in London seems in line with the rest of the country.
A larger relative deposit is an indication of a more solvent buyer and therefore an indication that current price levels are not over-stretching buyers. It also means a lower risk of negative equity.
I would be more worried if prices were going up and deposits going down.
Except if you remove the overseas buyers you are reliant on the domestic market.
The domestic market is struggling to reach London prices and eventually they will just get fed up.
I agree that overseas buyers push prices up.
However, they are unlikely to buy with a UK mortgage so I am not what impact, if any, they have on the figures quoted in this article.
My assumption is that people requiring a deposit to buy through a mortgage are residents.
You have been warned, the London market is heading for the doldrums. And it’s gonna be that way for a good while.
Agree. Something stinks about the disparity between London/rest of UK and I worry for the rest of the Uk when London comes tumbling down.