Every income bracket in London now struggles with housing affordability
In the heart of England, London continues to stand out as a city where housing remains fundamentally unaffordable, even for high earners. According to Eamonn Prendergast, Chartered Financial Adviser at Palantir Financial Planning, this trend extends across much of the UK.
The Office for National Statistics (ONS) defines housing as 'affordable' if it costs a maximum of five times the average salary. However, new data from the ONS reveals that the average English home costs 7.9 times the average salary. In London, this ratio is even higher, with someone earning an average income facing a house-price-to-income ratio of 13.5.
This high ratio is primarily due to the intense competition for housing in London, which has driven up land values and house prices. The limited housing supply, combined with high demand from both domestic and international buyers, has contributed to this trend. Over recent years, prices have increased steadily, reflecting a long-term trend of housing shortage and urban desirability.
Despite the pressure, London house prices remain remarkably resilient. Even though the house price inflation in London was the lowest in the UK, it still rose by 0.7% in the 12 months to July 2025. This resilience is further inflated by foreign investment, making London a global city with house prices beyond what the rest of Britain can expect to see.
The affordability crisis has led to innovative solutions from lenders. In 2025, they have been proactive in finding new ways to address the issue. However, in practice, deposits remain out of reach for many, and mortgage costs remain heavy across the UK.
In 2023, gifts and loans from the Bank of Mum and Dad totalled £9.4bn, nearly doubling in the last five years. This trend indicates the extent to which family support is needed to help first-time buyers navigate the London housing market.
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, has officially referred to England as "the land of the unaffordable." The ONS has also classified London housing as unaffordable for every income decile.
A lack of building and population growth have constrained the supply of housing in London, further exacerbating the affordability crisis. As the city continues to grapple with these challenges, it remains to be seen how the housing market will evolve in the future.
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