According to reports in the Daily Mail this week, parents in London are giving their children on average £36,000 to help them get onto the property ladder. This compares to a figure of around £32,000 in the East Midlands and £27,950 in the North East.
However, whilst it would seem that London parents are at the top of the table when it comes to generosity, when we look at regional prices, it may be that those in the North East actually fair better.
We took a look at some of the most recent properties added to the popular Right Move platform, to see how each area compared and what percentage of the value of the property, the parents contribution would make up.
We Started in London and to make a fair comparison, we have gone outside the centre of London and have chosen Brixton. Of properties added in the last week, prices fluctuated between £275,000 and £700,000, so we have gone for something somewhere in the middle.
As you can see we have settled for a very modest 2 Bedroom flat in the Streatham Hill area, which is priced at £374,995. According to the Rightmove mortgage calculator, based on a mortgage rate of 4.15%, this flat would cost £1818 per month, over 25 years, once the £36,000 deposit had been applied.
Next we took a look at the East Midlands, where parents apparently contribute on average £32,000, and have chosen Leicester as our East Midlands destination. Obviously with the success of their football team last season, we thought if anything, the market there would be fairly buoyant. Leicester seems to represent excellent value, with prices from £50,000 to £250,000 at the top end, so again we are going to look for something in the middle.
We’ve managed to find a really cool looking place, which is part of a new development called the Wheatsheaf Works. It’s a development being handled by Urban Rhythm and would definitely be popular for young, working couples.
This property would set you back £165,000, so with the £32,000 contribution from parents in the East Midlands, using the same mortgage calculator as before, this would work out at £714 a month, which is over £1100 less than the property in London.
We’re now finally going to take a look at the North East, where parents contribute on average £27,950. We’re looking at Newcastle and surrounding areas where property prices vary from around £50,000 up to £240,00 based on recently added properties.
We’ve managed to find an absolutely awesome place in the Staithes area of Gateshead, overlooking the river. It’s spacious, has 2 decent sized bedrooms and has a balcony too, absolutely perfect again for the young professional couple.
This super apartment is priced at just £125,000 which when we look at the mortgage calculator and factor in the £27,950, gives a mortgage repayment of just £521 a month.
We all know London prices will always be at a premium but in a digital age, with large numbers of people working from home and running businesses online, does London really deserve it’s current levy.
Generous parents in the North East and East Midlands can really give life changing amounts of money to their children, just by parting with £27-£32K. In London, £36,000 hardly seems to make a dent and still leaves mortgages of anywhere from £1500 to £1800 per month. Even when you factor in better wages, unless you are in a profession that pays a premium to staff, it seems that London may be in danger of out-pricing itself.