Is 2025 the year of the first-time buyer?

This could be your best chance to buy a home in more than a decade here's where to look

- ANNA WHITE

This year could present a window of opportunity for Londoners trying to get on the housing ladder as affordability improves to the most favourable levels seen for 12 years. New research reveals that average house prices will be 9.3 times average earnings this year after being as high as 10.7 in 2018 and 10.6 in 2022.

Following a tumultuous economic period of rapidly rising interest rates, factors such as growing wages, cuts to the bank base rate and gradually improving mortgage deals — all within a subdued housing market — mean that household incomes will go a little bit further when buying a home in 2025.

“From a peak in 2015, London’s house price affordability has improved over the past few years. While house prices have broadly risen on average across the capital, growth in average earnings has caught up such that the ratio of house prices to earnings is at its lowest in more than a decade,” reads the report by Mitheridge Capital Investment Bank and Oxford Economics.

The window is likely to be small, according to the data. The continued lack of supply in London, in combination with an increase in demand, will push up property values from 2026 onwards, so that house prices climb back to 10 times earnings by 2029.

This fits with the most recent outlook published by Savills. The estate agent predicts a three per cent growth in house prices in London in 2025, four per cent in 2026, up to as much as 3.5 per cent in 2027.

London’s most affordable borough

First-time buyer deposits remain eye-wateringly high at an average of £144,000 (UK Finance), meaning London’s housing market is now an inheritocracy — largely funded by the Bank of Mum and Dad — yet experts forecast the return of young buyers this year.

“We are already seeing a rush of first-time buyers trying to purchase before the stamp duty threshold lowers from £425,000 to £300,000 in April,” says Marcus Dixon of JLL.