Real Estate

London house prices may help explain Tories’ struggle to win young voters

If Boris Johnson wants to know why the Conservative party struggles to win the support of young voters in London he could start by looking at the annual report on the housing market from the Nationwide.

There is no single reason for the government’s unpopularity among people in their 20s and 30s in the capital, but housing is clearly a factor, and the current state of the market shows why. Without a top salary or generous parents, homeownership is all but impossible.

Nationwide measures affordability by using regional earnings and house price data to show where in the income distribution a potential purchaser would sit if they were aiming for a typical first-time buyer property, assuming a 20% deposit and borrowing four times their annual earnings.

In Scotland and northern England, the typical buyer would be in the 30th income percentile, whereas in the south-east they would be in the 80th percentile. In London they would be above the 90th percentile. That means someone on a modest salary in Glasgow can still aspire to buy their own home, whereas for all but the top 10% of earners in London, renting is the only real option.

As house prices have increased faster than incomes for the past decade, affordability has become more of an issue. Ten years ago, the average first-time buyer in the south-east was in the 60th income percentile.

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This trend goes some way to answering the big question for the property market in the year ahead: when will the pandemic boom that has seen prices rise by 16% since early 2020 come to an end?

A number of factors mean last year’s 10% increase in prices is unlikely to be repeated. Mortgage rates are rising and some purchases were brought forward into 2021 to take advantage of the government’s stamp duty holiday. But, as the Nationwide notes, affordability will be a factor. There comes a point where houses are simply too expensive for first-time buyers, even if they can access the bank of Mum and Dad.

Not everybody wants to own a home, of course, but the Conservatives have always liked to be seen as the party that sticks up for those who do. That’s a tough case to make when a 20% deposit on a typical first-time-buyer home in London is now £88,000 – almost double the average annual gross income in the capital.


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