London houses 'more affordable'

Houses in some areas of London are now as affordable as they were nearly ten years ago, according to a new report.

A property website's research claims that in some boroughs the ratio between average house prices and salaries is at the same level as it was in 2000.

But most analysts warn mortgages are still hard to come by, with many buyers only able to borrow up to 3.5 times their salary.

Land registry figures show the average house price in London is now £302,411.

In Bromley, south London, the average home now costs eight times the typical salary - the same as it did 10 years ago.

That is down from the peak level in 2003, when house prices there were almost 11 times the area's average salary.

BROMLEY AFFORDABILITY

• In May 2000 the average house cost £156,241 and the average salary was £19,752
• In May 2003 the average house cost £231,468 and the average salary was £21,663
• In May 2009 the average house cost £266,194 and the average salary was £33,027
• Sources: Land Registry and Office of National Statistics

Nicholas Leeming, director of propertyfinder.com, said: "Opportunities are emerging in the capital to buy homes cheaper than at any time in almost 10 years.

"People will look back to 2009 as a golden moment to get on to the property ladder."

But he conceded house prices may still "drift lower" over the coming months.

Since 2003 average earnings in London have risen 22% - while there has been a net 16.3% rise overall in London house prices between then and now.

Outer London boroughs such as Bromley and Havering in east London have seen the greatest shift in affordability.

Ross and Clare Ellner have just been able to buy a four-bedroom period house in Croydon for £235,000.

It would have cost in the region of £290,000 two years ago.

"In December last year we saw prices were dropping - and realised this was our chance"

Mrs Ellner, 28, who works for a publishing company, said: "When we started looking a couple of years ago we realised we could not afford anything in a nice area at all.

"In December last year we saw prices were dropping - and realised this was our chance.

"Our new house is something we could never have dreamt of two years ago."

Financial information service Moneyfacts warned that mortgages were still being rationed - making borrowing for first-time buyers relatively expensive.

Two thirds of the deals currently on offer require a 25% deposit with a quarter of deals needing a down-payment of at least 40%.

Andrew Montlake, of Coreco mortgage brokers, said: "Lenders will continue to have a very cautious approach until at least the end of the year.

"If you are a borrower with no credit issues there should not be a problem - for those trying to stretch their earnings it may prove difficult."

Most analysts warn that with house prices continuing to drop those buying now may see an initial fall in their investment.

It is also thought interest rates may rise, making borrowing more expensive.

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