Growing number of London residents now borrowing to pay for housing
Two recent studies have highlighted the mounting financial pressures facing London residents, particularly those aged 25 to 45, as the capital’s housing market continues to struggle with affordability and limited growth.
A survey conducted by property developer Pocket Living found that two-thirds of Londoners in this age group are now borrowing to meet housing costs, with one in three relying on credit cards and nearly one in five turning to payday loans. The findings suggest that the city’s persistent housing shortage is pushing many into debt, with the proportion of 25- to 45-year-olds considering leaving London due to housing costs nearly doubling to 42% over the past two years.
The impact is especially pronounced among key workers, more than half of whom are contemplating a change in sector because of housing expenses. Over half are also commuting more than an hour to work, and most report that the cost-of-living crisis has delayed their plans to purchase a home.
Seven in 10 renters say housing costs are affecting their mental health, and many are reducing spending on essentials such as food, transport, and childcare. Nearly half have postponed starting a family as rents continue to rise.
Political implications are also evident. The research indicates that 62% of 25- to 45-year-olds who voted Labour in the 2024 General Election would reconsider their support if the party does not fulfil its pledge to build 1.5 million new homes. Confidence in Labour’s handling of housing remains fragile, with only 41% of renters viewing the party’s performance positively. However, just one in five believe that Reform would do better on housing.
“Our latest research shows that the pressures facing not only young Londoners, but those into middle age, have deepened significantly over the past two years,” said Paul Rickard (pictured right), chief executive of Pocket Living. “What was once generation rent is now, for too many, becoming generation debt.
“Behind the housing numbers are real people; key workers, young professionals, and families who make this city work but are struggling to find a home they can afford. The social and economic risks of allowing this situation to continue are clear, not just for London but for the country as a whole.
“We are pleased to see both the government and the GLA recognising the unique challenges facing the capital through their recent proposals to encourage delivery, including a reduction in affordable housing thresholds. This is a positive step towards getting London building again and unlocking stalled sites that can deliver more homes for the people who need them most.”
Meanwhile, analysis by real estate advisor Savills suggests that house price growth in London will remain subdued over the next five years, with prices not expected to increase at all in 2026 and are predicted to lag behind the rest of the UK until 2030.
Factors such as the removal of stamp duty relief and high affordability ratios have contributed to weaker demand, prompting buyers to look to other cities with more accessible housing markets. The number of homes for sale in London is now about a fifth higher than a year ago, according to Rightmove.
“Since 2016… the more affordable regions in the North and Scotland outperform[ed] the UK average, and capacity for growth in London and the South is more limited,” said Dan Hill, research analyst at Savills. “In the absence of any whole market price correction, this pattern is likely to persist for the next five years.”
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