Now ‘impossible’ to save for a deposit in Hackney

It could take Hackney locals 19 years to see their own sold sign. Photograph: Nico Hogg .

Saving to buy a house in Hackney is becoming “literally impossible” as new figures indicate that deposits on properties are less affordable than they were this time last year.

House prices are rising so quickly that the money required for a deposit is growing annually by more than can be saved in a year, according to research published by the office of London mayoral hopeful Tessa Jowell. This means any extra money saved in the past year has effectively been swallowed up by inflated house prices.

Tessa Jowell said: “London’s housing crisis has spun so far out of control it is becoming literally impossible to save for a deposit in Hackney.”

It now takes over 19 years to save for a down-payment in Hackney, the seventh highest in the capital, and the highest in East London. The borough where buyers must save for the longest for a deposit is Kensington and Chelsea, where potential home-owners must save for 41 years.

The price of a deposit is based on 10 per cent of the median house price in Hackney, currently £430,000. A potential buyer’s saving potential is estimated to be 7 per cent of £31,724, the average annual earnings in the borough.

At the current rate of house price inflation, and taking into account average wages, the only boroughs in London where first-time buyers can hope to save enough for the average deposit are Newham, Croydon and Havering.

Betsy Dillner, director of Generation Rent, a campaign group for private renters, said: “As house prices have spiralled out of control, it was inevitable that Hackney would join the list of boroughs that are off-limits to first time buyers. Londoners’ inability to save for a deposit is also exacerbated by sky-high rents.”

Dillner called on any future London Mayor to calm house price growth.

Tessa Jowell, who is on Labour’s shortlist of candidates for Mayor of London, said: “We cannot go on like this – solving the housing crisis is the number one challenge facing this city – and will be my top priority if I’m elected Mayor.

“We have to start building the homes we need, that’s why on my first day in City Hall I’d establish Homes for Londoners to get London building again, starting on the Mayor’s own land. And I’ll help first time buyers afford their first home without the need for enormous upfront deposits by building rent-to-buy homes which will turn rental payments into a contribution towards a deposit.”

But Ms Dillner said controlling the private rented sector is also vital to addressing the capital’s housing problems. “The next Mayor of London can only solve this affordability crisis by bringing in rent controls and properly regulating the private rented sector, so that those who have to rent for longer in the capital also have access to a secure and decent home.”