Londoners squeezed into their first home and looking to step up the ladder need to find an extra £320,000 to leave a typical two-bedroom flat for a modest three-bedroom house, according to research published today.
The gulf between the first and second rungs of the ladder means many first-time buyers can find themselves trapped in a property that has become too small for their needs — especially if children arrive.
A typical London flat with two bedrooms now costs just over £500,000, the research by Savills shows. A typical three-bedroom house costs almost £820,000.
Even with some equity behind them and a possible improvement in salaries, the only option for many couples is to move out of London for good.
The more expensive the borough, the larger the cash difference between a first and second home. In Westminster, an average two-bedroom flat has an asking price of £1.15 million. However an average three-bedroom house has an asking price of £3 million — leaving owners an astonishing £1.85 million adrift when the time comes to move on.
On the upside, with a £1.15 million budget to play with, these buyers do have the choice of three-bedroom houses in the vast majority of London’s remaining boroughs.
The same scenario is true for flat owners in boroughs from Hackney to Richmond. Although they need hundreds of thousands of pounds to upsize locally, the relatively high value of their flats means they do have a good choice of other London locations.
Owners in the lowest-value areas have the biggest problems. The average two-bedroom flat in Havering has an asking price of £270,000. Upgrading to a house, with an average value of £400,000, would mean finding an extra £130,000. But a budget of £270,000 would not buy a house in any other London borough. Nor would it go far in the commuter belt.
Havering aside, the most affordable boroughs for first-timers looking to buy a two-bedroom flat are Sutton (£320,000); Croydon (£315,000); Barking and Dagenham (£227,500); Bexley (£267,498), and Hillingdon (£322,450).
Three-bedroom houses for less than £500,000 can still be found in almost a third of London’s boroughs: Sutton (£489,950); Croydon (£475,000); Havering (£400,000); Bexley (£385,000); Barking and Dagenham (£325,000); Hillingdon (£457,475); Redbridge (£462,500); Hounslow (£425,000); Newham (£450,000), and Greenwich (£477,475).
Frances Clacy, research analyst at Savills and author of today’s report, points out that first-time buyers are not the only Londoners being hit by the housing crisis. “Those looking to move up the housing ladder are also faced with a struggle,” she says.
|Borough||Average two-bedroom flat price||Average three-bedroom house price||Difference|
|Kensington and Chelsea||£1,425,000||£3,250,000||128.1%|
|Hammersmith and Fulham||£725,000||£1,249,725||72.4%|
|Richmond upon Thames||£550,000||£899,950||63.6%|
|Kingston upon Thames||£424,950||£655,000||54.1%|