Is Buying a Home in London Becoming More Affordable?

Buying a home in London is still difficult compared with the rest of the UK, although the latest figures suggest affordability is beginning to move in a better direction.

Research from Lloyds Bank, reported by MyLondon, found that the gap between house prices and earnings has narrowed over the past year.

Across London, the average home now costs 10.3 times average earnings, compared with 10.9 times a year earlier.

That does not suddenly make London cheap. It does mean earnings are starting to catch up with property prices, which could gradually improve the position for people hoping to buy.

Why Is London Becoming More Affordable?

The improvement has come from wages growing faster than house prices.

Property prices remaining relatively stable while earnings rise can make a difference to affordability over time, even without a significant fall in house prices.

This matters when applying for a mortgage because lenders assess how much you can borrow largely around your income and existing financial commitments.

Higher earnings can therefore improve the amount some buyers are able to borrow, while slower house price growth means the target is not moving away quite as quickly.

The ONS has seen a similar pattern nationally.

Its latest figures show earnings have grown considerably faster than house prices since affordability reached its recent low point in 2021.

The Picture Is Very Different Across London

One of the difficulties with describing London as affordable or unaffordable is the difference between individual parts of the capital.

The Lloyds research found Barking and Dagenham was the most affordable London borough when house prices were compared with local earnings. Kensington and Chelsea was at the opposite end.

We already know London contains some of the UK’s most expensive housing, so the useful part for buyers is not necessarily which borough sits at the top or bottom of a ranking, it is the size of the difference between them.

If you want to remain in London, being flexible about where you buy can change the amount you need to borrow and the deposit required to make a purchase.

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A Difficult Market Does Not Mean Every Buyer Is Priced Out

London remains the least affordable UK region in the Lloyds analysis, so there is little value pretending buying has suddenly become easy.

Affordability is also personal.

A London average cannot account for your income, deposit, existing commitments or whether you are buying alone or with somebody else.

We regularly speak to buyers who are unsure if their current finances are enough to buy because they have been looking at headline London property prices.

Once their actual borrowing position is established, the search can look quite different.

For some, that confirms they need more time. For others, it shows that buying may already be possible if they change the price range or area they are considering.

Smaller Deposit Mortgages Have Changed the Starting Point

Saving the deposit remains one of the biggest barriers to buying, particularly when London property prices turn a relatively small percentage into a significant amount of money.

You may only need a 5% deposit for some mortgages, subject to your circumstances and the lender’s criteria.

There are now also 98% mortgages available to some eligible first time buyers, reducing the minimum deposit to 2% in certain cases.

A gifted deposit can provide another route where family members are in a position to contribute towards the purchase.

None of these options solve the wider affordability problem on their own.

They can make a difference where someone has enough income to support a mortgage and the deposit is the main thing preventing them from buying.

Could Your Mortgage Budget Look Different in 2026?

If you looked at buying a home a year or two ago and decided it was out of reach, it may be worth checking the numbers again.

Your income may have changed, you may have added to your deposit and the relationship between earnings and property prices has started to improve.

Mortgage affordability also varies between lenders.

They do not all calculate borrowing in exactly the same way, particularly where income includes overtime, bonuses, commission or other less straightforward elements.

This means an online estimate or a calculation you made previously may not reflect what is available to you now.

Knowing Your Budget Comes Before Choosing the Property

The latest figures are encouraging because London affordability is moving in the right direction, even if there is still a considerable distance to go.

For someone hoping to buy, the useful question is not really whether London as a whole is affordable.

It is whether a mortgage is affordable based on your own income, deposit and circumstances.

Speaking to a mortgage broker in London can establish how much you may be able to borrow before you narrow down your property search.

We can typically provide an Agreement in Principle within 24 hours of your initial appointment, giving you a clearer budget to work with when deciding where in London you could realistically buy.

Date Last Edited: October 6, 2026