Despite house prices in London falling, first-time buyers (FTBs) are still often paying more than homemovers to begin their climb on the housing ladder, analysis from Gatehouse Bank revealed.

The Shariah-compliant home finance provider found that areas traditionally popular with those purchasing their first property were among the few places in the capital to see prices buck the downward trend over the past year.

Average London property values have been falling on an annual basis since March 2018, declining 1.92 per cent to March 2019, down from an average of £472,357 to £463,283. However, in Barking and Dagenham, one of the more affordable areas in the capital, the average price paid by FTBs increased 2.91 per cent, up from £276,701 to £284,751 in the same period.

Gatehoue Bank highlighted that this “counter-intuitive” trend continued across other areas favoured by FTBs, highlighting that prices paid in Hackney were up 5.4 per cent, Hillingdon 0.67 per cent, Hounslow 2.45 per cent, Merton 3.61 per cent and Newham 4.87 per cent. Property prices in Bexley also saw a 0.58 per cent rise, while Richmond upon Thames saw a 2.12 per cent increase.

Looking within the City of London, the average price paid by a FTB rocketed 16.24 per cent, soaring from £757,240 in March 2018 to £880,204 in March 2019. Although, the lender suggested that this was likely due to low sale volumes in the area.

In the nine boroughs to see a rise, the average price of homes bought by first-time buyers went up 4.3 per cent.

Despite this, the most significant drop in the amount paid by FTBs was in Kensington and Chelsea, where the average price fell 16.69 per cent, from 1,217,182 to £1,013,999 – a drop of more than £200,000.

Commenting, Gatehouse Bank CEO Charles Haresnape said: “The trend for the London property market over the last year has been all about falling prices and most people would expect the one silver lining to be that FTBs would find it easier to get on the housing ladder.

“Sadly that’s not the case. It is counter-intuitive but in many areas popular with FTBs, the situation is actually getting worse. A young couple hoping to buy in Hackney today would have to find an extra £27,310 to purchase a property compared to a year ago.

“It could be that the shortage of affordable housing for FTBs is forcing up prices in areas where it is generally cheaper to get on the housing ladder. This continuing disparity means FTBs are experiencing a two-speed London, with prices moving in different directions as you cross borough boundaries.”

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