Whether you are trying to make it big in your chosen field, be in the heart of the UK culture scene, or just to live in one of the most famous cities in the world, people are drawn to London and everything it has to offer for all manner of reasons. However, one of the key factors that puts many people off the capital is the price.
The London property market is comparable to only a few other cities in the world, and it frequently features in lists of the most expensive cities to live in. Homebuyers looking to get on the property ladder are often put off by the high house prices and hefty mortgage rates.
House price growth has slowed slightly in the last couple of years, but the property prices in London are still far higher than anywhere else in the country.
So, is it worth buying a house in London?
Is it worth buying a house in London?
Many of the factors that may or may not make it worth buying a house in London are specific to each individual. How much money you earn, where you are buying, and whether your job includes London weighting are all considerations you should take into account when making your decision.
London is one of the most exciting cities in the world and has things on offer that nowhere else does. However, buying a house is a big commitment so it may be worth living in a London rental property before deciding whether to buy there or not.
What is the average house price in London?
As of February 2022, the average house price in London for all types of property (including flats and maisonettes) is £529,882. This represents a 2.2% rise since January 2022 and an annual rise of 8.1%.
Although this leaves the average house price at a very high rate that is unaffordable for many people, the growth rate of property prices in London has been lower of late than it is in almost all other parts of the UK.
In England, the average house price in February 2022 was £295,888. This indicates a rise of 0.9% since January 2022 and an annual price rise of 10.7%.
Wales saw a slight drop of 0.7% in average house prices between January and February 2022, with the average price now being £205,114. However, this still represents a 14.2% rise in property prices since the previous year.
The average price of a property in Scotland in that same period was £182,786, which is representative of a 10.8% annual rise and a 2.2% monthly rise.
Northern Ireland remains the cheapest place to live in the UK, with the average house price at £159,151. It is also the only country within the UK to have a slower growth rate than London, with its annual increase being only 7.9%.
One of the primary reasons that London has been lagging behind the rest of the country was the impact of the Covid-19 pandemic. During the lockdown, UK Chancellor Rishi Sunak introduced a Stamp Duty Holiday that favoured property buyers outside of the capital as it was limited to properties under £500,000. There was also a flurry of house hunters who sought to buy in more affordable locations as their work became remote and was no longer tied to London.
What is the average wage in London?
The mean salary in London in 2021 was £53,700. However, the mean measure takes into account very high salaries, of which there are a lot in the capital.
The median salary in London in 2021, on the other hand, was £39,700. The median is a more accurate measure of what the average person earns as it discounts very high and very low figures.
By comparison, the mean salary across the UK in 2021 was £38,100. And the median salary during the same period was £39,700.
Salaries in London are higher than in the rest of the country because many of the best-paid jobs are only available in the capital. Law firms, banks, hedge funds and investment companies are all best paid in London.
Moreover, some jobs – including public sector roles – come with a London weighting. London weighting is an additional amount of money that is added to your pay packet that takes into account the extra costs that you pay when you live in London, such as commuting costs and higher rent.
Some jobs pay an extra 20% to workers who live and work in London as part of their London weighting, though not every job in the capital offers it.
How much does commuting cost in London?
On top of the extra costs in mortgage repayments or rent, there are also the commuting costs to consider. The average London commuter spends around £122 a month on travelling to work. However, if you travel from outside of London into the city, then the average cost is around £305 a month.
This is where London weighting should come into consideration in your ultimate decision about whether or not to buy property in the capital. If your work subsidises your travel costs, then it may well be a good move. If they do not, then you can end up spending thousands of pounds over the years as you accrue more and more costs commuting.
What are the most affordable London boroughs?
Of course, London is a big place that is home to millions of people of all backgrounds and financial standings so there is a range of house prices to accommodate its diverse citizens.
Many of the more affordable parts of London are far closer to the rest of the UK in terms of living costs than you might think. Here, we will take a look at some of the boroughs at the more affordable end of the spectrum.
London boroughs with the lowest average house price
|Borough||Average House Price|
|Barking and Dagenham||£300,517|
Barking and Dagenham
Barking and Dagenham have the lowest average property value in all of London. The average property in the borough is £300,517, which is only just above the England average of £295,888.
Living in Barking and Dagenham comes with many perks, not least the quick and easy transport links into central London. Many workers see the East London borough as a great option for people who want all the benefits of living in London while paying only a fraction of what they would in some of the other areas.
The average house prices in Bexley are just above Barking and Dagenham’s at £342,993. The South-East borough has more than 100 parks and is one of the greenest boroughs in London.
Bexley is also one of the greenest boroughs in London. On top of a large number of green spaces, it is also the top borough for renewable energy consumption, according to a 2018 study by London Cleaning System.
So, with low accommodation costs and great green living, Bexley is a great choice for anyone looking to buy property in the capital.
With property prices of just £359,336 and easy access to Central London, Croydon has a lot to offer. The South-London borough is one of the most populous and is set to be the London borough of culture in 2023.
Croydon is home to many nice parks and is becoming increasingly popular amongst artists and creative types. So now may be the perfect time to buy property in Croydon as the accommodation is still relatively affordable!
What are the least affordable London boroughs?
At the other end of the spectrum are the least affordable London boroughs. These are the areas in which the average property prices are at the highest in the city and, indeed, the country as a whole. Unsurprisingly, many of these boroughs are located close to the centre of the city.
London boroughs with the highest average house price
|Borough||Average House Price|
|Kensington and Chelsea||£1,502,349.00|
|Hammersmith and Fulham||£910,063.00|
|Richmond upon Thames||£788,004.00|
Kensington and Chelsea
Kensington and Chelsea currently have the highest average price of all London boroughs, with the average home costing over £1.5 million. It includes famous and affluent areas such as Notting Hill and Knightsbridge.
The inner-London borough is home to some of the capital’s most popular attractions, such as the Victoria and Albert Museum, Kensington Palace, Harrods, and the Natural History Museum. With such amenities and the city centre just a stone’s throw away, is it any wonder that the prices are as high as they are?
Shortly following, with an average house price of £1,447,028, is Westminster. Westminster is in the heart of London and is a byword for the UK’s parliament and democracy.
However, with such high average property prices, taking up residence in the borough is only for a select few who can afford such astronomical prices.
Camden is world-famous for its music scene, cool culture, and at one time, for being home to the likes of Amy Winehouse, Pete Doherty, Jude Law, and Kate Moss.
However, gone are the days when it was the rough, cheap, and edgy part of town, as the average house price in Camden is now £968,276. Although quite a bit below Westminster and Kensington and Chelsea, Camden’s average property price tag is enough to make it the third most expensive in London.
What are the affordable alternatives to London?
With more and more people leaving London since the onset of the Corona-virus pandemic, there has never been a better time to look for alternatives to the Big City. Here, we will take a look at just a few of them.
Brighton and Hove
Brighton and Hove has long been a popular choice for commuters who work in London but want to live somewhere more affordable, less busy, and of course, by the sea. However, house prices have been rising in Brighton and Hove and are currently at £337,094.
As house prices look set only to rise further, now may be the best time to buy property in Brighton and Hove before even more people escaping the costs and bustle of London get the same idea.
Manchester is a lively city in the North-West with a unique history and a vibrant cultural scene. Known for being far more affordable than its Southern counterparts, it is a wonderful place to live that has all the perks and jobs of a big city for only a fraction of the prices in London.
The average price of a house in Greater Manchester (which includes areas outside the city) is currently £185,700.
Glasgow has grown its reputation over the years and is now a very popular destination for artists and creatives looking for a buzzing city with low accommodation costs.
The average house price in Glasgow is currently around £165,00. However, as with much of Scotland, that figure is projected to rise in the coming months and years as Scotland becomes a more desirable and sought after place to live.
Many people decided to leave London during the pandemic as their jobs became remote. This led to the UK housing market inflating considerably, while the London market slowed somewhat. Despite this, London is still one of the most expensive cities in the world and by far the most expensive in the UK.
Although you may think that this means that living in London is only for the super-wealthy, there are some very affordable boroughs that are great in their own right. Before deciding whether or not you want to buy a property in London, consider other factors such as the cost and time of your commute, your salary, and the kind of area you want to live in.
If you do decide to take the plunge and buy in London, although you may have to take a financial hit, you will also be lucky enough to live in one of the greatest cities in the world.