The number of home buyers in London dropped to a four-year low in 2016 while the number of loans taken out by purchasers plummeted to its lowest level for a quarter of a century, according to the Council of Mortgage Lenders.
Buyers in London borrowed £24.5 billion for house purchases, down 0.4 per cent on 2015, but the number of loans - 75,800 - was 7.0 per cent below the 2015 level.
Despite some agents suggesting there is a glut of homes on sale in at least parts of the capital, the CML blames supply problems and affordability issues.
The amount borrowed by first-time buyers went up three per cent to £11.9 billion but existing owners moving home borrowed £12.5 billion - that’s three per cent less than 2015.
CML director general says the four-year low is part of a broader downward trend “with the fewest loans since 1991".
"Persisting supply and affordability issues appear to be exerting an ongoing restraint on growth, meaning there is some uncertainty around how the market will perform going into 2017. By contrast, remortgage activity appears to be experiencing a resurgence. Competitive mortgage rates aided by low interest rates have sparked remortgage levels not seen in the capital since 2008” says Smee.
The CML data showed that the average loan size for first-time buyers in the capital was £254,000 in the fourth quarter of 2106. The average age of borrowers was 31, and the percentage of monthly income going towards servicing capital and interest repayments was 18.1 per cent - down from 19.4 per cent in the final quarter of 2015.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, was relatively upbeat about the figures.
“The fact that the proportion borrowed by first-time buyers is falling is encouraging, perhaps showing a more level playing field with investors but also probably includes quite hefty deposits from the bank of Mum and Dad” he said.
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