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London home prices and incomes drift even further apart

Georgian houses in London
Georgian houses in London

London boasts one of the most expensive housing markets in the world – and it’s only getting dearer, as low mortgage rates push prices skyward.

The average Londoner must now spend 14.2 times their annual gross salary of 33,720 pounds ($42,048) to buy a house. That is the highest level on record and more than double the ratio for the U.K. overall, according to data compiled by Hometrack and cited by Bloomberg.

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Home prices in London have leapt 86 percent since 2009 due to low supply. The average price of a house in London is now 482,800 pounds.

“Overseas buyers looking for a safe haven, robust demand from domestic investors seeking protection from ultra low interest rates and huge demand from potential homeowners has caused prices to surge,” Richard Donnell, a director at Hometrack, said by telephone. “The jump is way in excess of the increase in peoples’ earnings, hence lots of people are simply priced out of London now.” [Bloomberg] –Christopher Cameron