London house prices: Kensington and Chelsea least affordable

The Royal Borough of Kensington and Chelsea has been identified as London's least affordable borough for buying a home. According to analysis by Lloyds, the average property price in the borough stands at £895,893, which is 17.3 times the average salary. This contrasts with Barking and Dagenham, which remains the most affordable borough in the capital, with an average property price of £322,675, equating to 6.2 times average earnings.

London Affordability Improves

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Despite remaining the least affordable place to live in the UK, housing affordability has improved across London over the past year. The average home in the capital now costs 10.3 times the average salary, down from 10.9 times a year ago. Lloyds attributed this narrowing of the affordability gap to wage growth outpacing house price increases.

Nationally, housing affordability has reached its most favourable level in over a decade. Lloyds' analysis, which used data from its house price index and Office for National Statistics figures for April to June 2026, found the average UK home costs approximately 7.3 times average earnings. This is the lowest price-to-earnings ratio recorded since 2015, falling from 7.6 a year prior.

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Andrew Asaam, mortgages director at Lloyds, noted that while there are encouraging signs for prospective homeowners, affordability remains stretched for many. He highlighted that mortgage rates are higher than they were a year ago, and saving for a deposit continues to be a significant barrier for first-time buyers. Mr Asaam suggested that buyers might have more options than they realise, including mortgages designed for those with smaller deposits, which could assist some in purchasing a property sooner.

For first-time buyers specifically, the average UK home costs just under six times earnings, with a ratio of 5.9. The analysis indicated that a small shift in location could make a substantial difference in what property is within reach, with many parts of Scotland and northern England offering better value relative to local earnings.