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London weakest region for house price rise and least affordable to buy

House prices rise by a modest 2.6% with London the weakest region and least affordable due to difficulties of raising a deposit.

The latest house price index from Nationwide shows only modest growth of 2.6% in 2017 compared to 4.5% in 2016 with London the weakest region falling -0.5%.

Average property values in the UK are £211,156 and the slowdown in growth gives first time buyers a chance to save enough of a deposit to buy their home.

Robert Gardner Nationwide's Chief Economist said, house price growth in the 2-4% range this year marked a modest slowdown from the rates recorded in 2016.

Low mortgage rates and healthy employment growth continued to support demand in 2017 although this was offset by mounting pressure on household incomes exerting a drag on consumer confidence.

With competition from buy-to-let investors and reduced supply of suitable properties, prospective home buyers must continue renting and saving for a bigger deposit.

London least affordable place to buy

London house prices saw a particularly marked slowdown with fall of -0.5% for the first time in eight years, the weakest performing region for the first time since 2004.

Nationwide research for first time buyers shows there are significant differences in affordability in 2017 when compared to 2007 reflecting the disparities in house price levels relative to household income.

In London and the South East affordability has become more challenging in the last ten years with more people priced out of the market or need to borrow a greater multiple of their income.

Affordability has improved for Wales, Scotland and North of England with the biggest improvement from Northern Ireland due to the large correction in house prices which remain 40% lower than in 2007.

Disparities in house prices for home movers means the gap between their current home and the next increases requiring them to have a larger mortgage or greater deposit.

Homebuyers must save a bigger deposit

Another important aspect of affordability is the amount for the deposit and the time taken to save to buy a home.

In London the average property value is £470,922 and a 20% deposit would need you to save £94,184, more than twice the national average.

The level of deposit in London is about £30,000 more than five years ago whereas in the Midlands and Northern England the level has not changed in the last ten years.

In contrast London homeowners have on average gained £170,000 in equity as house prices were £300,000 five years ago giving the remortgage buyer the opportunity to release capital which they can use to improve their home.

Nationwide have estimated for the typical homebuyer it now takes 8 years to save for a deposit rising to 9 years in the South East and nearly 10 years in London.

One possibility for the deposit is help from family as the older equity release buyer can access wealth in their property using a lifetime mortgage which can be given to a child or grandchild for a deposit on their first home.

What are your next steps?

Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

Learn more by using the mortgage cost calculators, equity release mortgage calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to improve your quality of life, pay for care at home or gift to a family member or friend.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.


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