The most affordable places to buy a home in London
Tower Hamlets tops the list of the most affordable boroughs in London, although affordability in the capital is far worse than the rest of the UK.
This is according to research from online property website Zoopla which reveals the most affordable boroughs for buying a home in London.
Zoopla calculated affordability based on a ratio of house price to earnings, where the latter reflects the average earnings of a two-earner household within the local area.
This offers a more realistic view of affordability for London than comparing house prices to national average earnings, as earnings in London are general higher.
The resulting house price-to-earnings ratio reflects the affordability of the home. A lower ratio means the house is more affordable, and a higher ratio means a house is less affordable.
There is a significant range in house price-to-earnings ratios in London, although all are well above the UK average, portraying the disparity between affordability in the capital and the rest of the country.
Tower Hamlets tops the list for affordability in the capital with a price-to-earnings ratio of 4.97. Zoopla says that while this reflects the higher incomes of those who live locally and a large supply of apartments in the local area, this ratio is still four-times worse than the most affordable areas of the UK.
“In line with general trends, the majority of the affordable boroughs in London are found in Outer London. However, three Inner London boroughs – Tower Hamlets, Southwark and Lambeth – are exceptions to this,” Zoopla said.
“Whilst property prices in these areas are still relatively high, the area boasts above-average local earnings and a greater quantity of homes – largely dominated by flats.”
“These factors combine to lower the house price-to-earnings ratio, bringing it more in line with Outer London boroughs.”
Below are the ten most affordable boroughs in London, based on average household income and median home values in each area.
| Borough | Median Home Value | Estimated Annual Household Income | House Price-to-Earnings Ratio |
|---|---|---|---|
| Tower Hamlets | £455,400 | £91,700 | 4.97 |
| Croydon | £423,400 | £77,300 | 5.48 |
| Greenwich | £448,800 | £81,200 | 5.53 |
| Lewisham | £448,100 | £80,200 | 5.59 |
| Southwark | £491,500 | £87,300 | 5.63 |
| Havering | £467,900 | £82,700 | 5.66 |
| Barking and Dagenham | £391,100 | £66,800 | 5.86 |
| Lambeth | £522,400 | £88,600 | 5.89 |
| Merton | £530,600 | £88,300 | 6.12 |
| Bromley | £546,100 | £89,300 | 6.12 |
