Youth Perspectives

Young Londoners face over 20 years of saving to buy a small apartment

Young people working in London are earning far less than people the same age did 10 years ago. Image: REUTERS/Toby Melville

John McKenna
Senior Writer, Formative Content
The Big Picture
Explore and monitor how Real Estate is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Real Estate

London is one of the most expensive cities in the world for buying property.

Swiss bank UBS says London is second only to Hong Kong in terms of affordability for first-time home buyers. It claims it would take an average earner in London 16 years of saving to be able to afford to buy a 60 square metre apartment.

Image: UBS

However, UBS’ estimate of 16 years looks highly optimistic when compared to a 2017 report in The Financial Times.

It claims that young Londoners could actually face up to 50 years of saving to be able to afford a £250,000 ($352,000) apartment in the centre of the city.

The claim is based on data from the UK’s Office for National Statistics which shows that the average salary for Londoners in their twenties is £29,900 ($42,000) before tax.

If young Londoners save 20% of their net income and secure a mortgage at 4.5 times their salary, it would take 41 years and five months to buy a £250,000 studio flat.

And that’s if you’re an average man: it would take an average woman nearly 50 years, because the average salary of young women in London is lower than that of their male counterparts.

Pay gap

Overall, twenty-somethings in the UK capital are earning far less in real terms than people the same age did 10 years ago, while property prices have continued to rise over the same period.

UBS’ data shows that inflation-adjusted housing prices are almost 45% higher than five years ago, and 15% higher than before the financial crisis a decade ago.

At the same time, real incomes have fallen by 10%, and the situation is even worse for Londoners under the age of 30: their pay has fallen by 13% in real terms over the past 10 years, according to UK thinktank Resolution Foundation. Only Greek millennials have it worse, with their pay having fallen by 25% in real terms since the global financial crisis.

Unsurprisingly, as the UBS chart below shows, the ratio of property prices to income in London is at an all-time high.

Image: UBS

Brexit benefit?

The above chart also shows how political instability caused by the UK’s vote in 2016 to leave the EU has led to a cooling of the London housing market. However, according to UBS this has been largely felt across the high-end property segment.

The types of properties being sought by first-time buyers remain in high demand, due to a chronic under-supply of new housing both for purchase and rent in the UK capital. The number of new housing projects started in London in 2017 actually decreased, further aggravating the situation.

London’s ability to build the number of new properties needed to meet demand is hampered by planning regulations that prohibit building above seven storeys in most areas, as well as the preservation of green areas on the outer edge of the city, known as the “Green Belt.” London also has among the highest construction costs in the world, which further contributes to the unaffordability of property for young people.

With such deep structural problems facing London's housing market, it's possible that the only young house-hunters who could get a look in are millennials from mainland Europe and Asia. Thanks to the political instability caused by Brexit, the British pound has weakened against other major currencies. Meanwhile, London has fallen to an all-time low of 30th place on The Economist’s cost of living survey of cities.

Have you read?
Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.


This computer game makes students better at spotting fake news

Andrew Moose and Ruma Bhargava

April 5, 2024

About Us



Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum