Despite the cooling down of house price growth in the capital over the past 12 months, a sizable proportion of Londoners still believe that we are headed towards another crisis.
The research asked Londoners to say if, and when, they believed the UK housing market would experience a crash. The results showed that over half of Londoners (55% excluding “don’t know”s) believe there will be a crash within the next 5 years, rising to two thirds of respondents (65%) who say there will be a housing crash within the next decade.
Looking at the positives from the results, just 6% of Londoners believed there would be a crash within the next 12 months. There were also just under a third of Londoners (30% excluding “don’t know”s) who said there would not be a crash at any point in the future.
Figures released last month showed that London was officially the weakest region for house price growth in the UK last year, with prices rising just 2.5% in 2017. However, prices in the capital are still vastly unaffordable for the majority of first time buyers, especially for aspiring young homeowners.
The YouGov results found that older generations were more confident in the stability of the housing market, while younger generations were more likely to believe there would be a crash in the near future.
Nick Marr, co-founder of TheHouseShop.com, said: “House prices in the capital are quite simply unaffordable for the vast majority of young Londoners. With wages failing to keep up with house price growth, young people are seeing the dream of home ownership escape ever further out of reach.”
The problem for young Londoners is that even if they can somehow manage to save up a £100,000 deposit, they still have to contend with the salary multiple restriction imposed for mortgage lending. Most people will only be able to borrow 3-4 times their salary, so even if you are on a relatively good salary of £40,000 per year, you will only be able to borrow between £120k to £160k – hardly enough to buy a garage in London, let alone a decent home.
It is not surprising that some young Londoners are in fact hoping for a housing crash so that they can snap up properties at bargain prices during the crisis. They could then enjoy the same type of value appreciation that saw their parents’ generation accrue significant personal wealth from property ownership.”
It may seem drastic, but some young Londoners see this as one of their only viable routes into home ownership.”
