London party

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

If Boris Johnson wants to know why the Conservative Party is struggling to win the support of young voters in London, he could start by looking at Nationwide’s annual housing market report.

There is no single reason for the government’s unpopularity among people in their twenties and thirties in the capital, but housing is clearly a factor, and the current state of the market shows why. Without a high salary or generous parents, home ownership is almost impossible.

Nationally, measures affordability using regional income and house price data to show where in the income distribution a potential buyer would be if they were targeting a typical property for a first-time buyer, assuming a 20% deposit and borrowing four times his annual income.

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

As house prices have risen faster than incomes over the past decade, affordability has become a bigger issue. Ten years ago, the average first-time buyer in the Southeast was in the 60th percentile of income.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

This trend partly answers the big question of the real estate market for the coming year: when will the pandemic boom that has seen prices increase by 16% since early 2020 end?

A number of factors mean that the 10% price hike from last year is unlikely to be repeated. Mortgage rates are on the rise and some purchases have been brought forward into 2021 to take advantage of the government’s stamp duty holiday. But, as Nationwide notes, affordability will be a factor. There comes a time when homes are just too expensive for first-time buyers, even if they can access mom and dad’s bank.

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