First time buyers in London are spending 26 per cent below the UK market average, but the majority of buyers are struggling with affordability.
According to a new report by Zoopla, the average cost of a first time property in London is £399k, which is around £140k cheaper than a typical home would cost in the rest of the country.
However, the cost of getting on the housing ladder remains unattainable for many.
Nationwide said in January that in 2022/23, nearly half of first-time buyers had some help raising a deposit, either in the form of a gift or loan from family or friends or through inheritance – up from 27 per cent in the mid-1990s.
House prices are expected to fall by an average of two per cent this year, but a number of reports by lenders have shown that costs have actually risen for the last four months.
According to the latest reading from Rightmove, house prices rose by 0.9 per cent in February to £362k.
While this is not a massive increase, residential properties are still around £40,000 more expensive than what they were pre-pandemic.
Mortgage rates have declined, in response to cooling inflation, however remain around three per cent higher than their December 2021 average of 2.34 per cent.
Zoopla said recent falls in mortgage rates costs will support first-time buyers looking to buy in 2024.
Izabella Lubowiecka, senior property researcher at the firm said: “We expect more first- time buyers to come to market in 2024, particularly in the second half of the year thanks to a combination of reduced mortgage rates, earnings growth and improved affordability.
“But the reality is that many would-be buyers might be able to get on the ladder now by considering different property types or alternative locations that offer better value for money.
She added: “First-time buyers are in a stronger position in the current buyer’s market so we encourage them to be resourceful and assess all the options available to them.”