Agent says you need £100k income to buy in ‘cheap’ part of London

The director of a London estate agency claims a buyer needs an income of £100,000 a year to purchase a home in just a cheap part of the capital.

Marc von Grundherr of Benham and Reeves says: “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.”

He makes his assertion based on the fact 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.

Even in Canary Wharf which is home to some of most affordable properties, with an average price of £534,977, the typical homebuyer would still need to earn £101,051 to secure a mortgage. 

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).