House prices have always been less affordable than almost anywhere else in the UK, but the latest data has shown the challenge has become even steeper.
The Office for National Statistics (ONS) has revealed that when two factors are combined - the median income for Londoners at the end of the 2022 financial year of £36,800 and the average house price at the time of 510,000 - the typical home was 13.9 times the median income in the capital.
Based on these figures, only the top ten per cent of earners in London could afford the typical home with five and a half years of income, with this group having an average income of £92,000 a year.
These figures are based on last year’s situation, but anyone contacting estate agents in Cheam to help find a property in the area will face a steeper challenge this year; the latest ONS figures, covering up to May 2023, revealed the average London price is now £526,000, albeit this representing the second lowest year-on-year increase of any English region.
While the lower rate of house price inflation may be some comfort, it needs to be balanced with higher mortgage rates, especially after a series of base rate rises. The recent increase to five per cent was the latest in a succession of rate hikes aimed at curbing inflation. It was only in May 2022 that the rate reached one per cent for the first time in almost 13 years.
Although the rate of consumer price index inflation is now coming down, it is likely there will be further base rate increases to come. In the meantime, with many people’s pay not keeping pace with prices, affordability has been squeezed further by the cost of living squeeze.
For that reason, you need to work with skilled estate agents in finding the right property in Cheam for you, taking into account everything you can afford.