"It’s fair to say that the London market has been hit hardest by a reduction in market activity as a result of higher interest rates, with buyers simply not able to stretch as far as they usually may have due to the higher cost of borrowing"
- Marc von Grundherr - Benham and Reeves
The latest research from London lettings and estate agent, Benham and Reeves, analysed current market values across 28 areas of London’s prime property market, looking at the mortgage required to purchase a home and the average earnings needed at a lending multiple of 4.5 times income.
The research shows that with the average London home currently valued at £523,376, the average London buyer requires an income of £98,860 to be eligible for a mortgage at 4.5 times income, having placed a 15% deposit of £78,506.
However, for those looking to purchase a property at the top end of the capital’s housing ladder, the earnings required are far greater.
Nowhere more so than in Mayfair, where the average home commands a price tag of £4.1m. Even after placing a 15% deposit of £616,484, the average homebuyer would require an income of £776,314 to be eligible for a mortgage at 4.5 times their income. That’s 7.9 times the income required of the average London homebuyer.
Across Knightsbridge, the average homebuyer needs to be earning £629,841 in order to be eligible for a mortgage, with this figure also sitting above £500,000 in Belgravia (£561,353).
Even in Canary Wharf which is home to the most affordable average house price of all prime London locations at £534,977, the average homebuyer would still need to earn £101,051 to secure a mortgage.
Director of Benham and Reeves, Marc von Grundherr, commented: “It’s fair to say that the London market has been hit hardest by a reduction in market activity as a result of higher interest rates, with buyers simply not able to stretch as far as they usually may have due to the higher cost of borrowing.
"When you look at the affordability of London homes it’s easy to see why, as unless you’re earning close to six figures, the prospects of purchasing a property alone are virtually impossible. The prime London market is a completely different animal in this respect and you really do have to be earning tremendous sums to be house hunting in the likes of Mayfair and Knightsbridge.
"However, it does highlight the strength of the London market, where even in times of market uncertainty, bricks and mortar continue to command the very best prices in the land, particularly across the prime London market.”
