More than a third of London homes are now cheaper to buy than to rent as house prices in the capital shrunk in the last year. The proportion of London houses cheaper to buy with a mortgage has doubled since last year, from 18 to 36 per cent.

The Shifting Dynamics of Homeownership

February is set to observe a decade-record number of newly listed homes on the national market, signaling a return of confidence following previous uncertainty. Housebuying activity rebounded at the start of the year, though sales remain three per cent below February 2025 levels.

A Boost for First-Time Buyers

Falling mortgage rates are creating opportunities for first-time buyers, with some of the best deals available in several years. Mortgage rates for both two-year and five-year fixed-term deals have dipped below four per cent for the first time since 2022.

Currently, 40 per cent of UK homes listed on Zoopla are cheaper to buy on a 30-year mortgage than to rent with a 20 per cent deposit – up from 25 per cent year-on-year.

This proportion rises to over half in some regions, including the North and Scotland.

London’s Unique Position

The number of homes for sale in London is 16 per cent higher than this time last year, significantly exceeding the six per cent national average. London house prices fell by 0.2 per cent year on year, while national price inflation stands at 1.3 per cent.

Experts suggest rising supply is beginning to outstrip demand in the capital. Plans delayed by previous budget speculation are now being activated, and more landlords are looking to sell.

Looking Ahead: Challenges and Opportunities

Future housing market plans may face further delays with a potential Labour leadership race on the horizon. A significant boost to the number of affordable homes is needed to match rising prices. Labour has pledged to build 1.5m homes, including 440,000 in London, but current progress raises concerns about meeting this target.