Research from Benham and Reeves in August stated the average London house price was currently just over £525,000.
A 20 per cent deposit means that the initial down payment needed to buy this average London house is approximately £105,000.
This then leaves roughly £420,000 to be covered by a mortgage.
But the average mortgage provider will lend up to 4.5 times a buyer's income. This means that the average solo buyer, buying the average London house, will have to earn, at least, £93,000.
The problem there lies that the average London salary is just over forty-four thousand pounds. This means that buyers need an annual salary increase of 111 per cent, and that’s just to buy your average house.
A lot also depends on postcode in the capital. For example, in Wandsworth, the area with the smallest affordability gap, the average person would still require a 72 per cent increase in pay to obtain a mortgage for the average home in Wandsworth.
The borough with the worst affordability is the borough of Camden. The average house price here is roughly £860,000 but the average income in Camden is only £48,000 pounds.
That means the earning gap is a staggering 214 per cent, making it the least affordable of all London boroughs.
How can someone feasibly become a homeowner while the house price-to-income ratio is so large, and more interest rates could well be on the cards?
Theo Gray has been doing work experience with FTAdviser.
This report accompanied the latest podcast on the mortgage market, which you can listen to above.
