This one chart shows why it's impossible to buy a London home without a rich family
HSBC just released a report charting everything that is going in the British housing market.
Predictably, house prices were "buoyant" in August and were seasonally more muted in "back to school" season of September. Basically, prices are continuing to rise and it doesn't look like that growth is going to stop any time soon.
That's alright for those selling a property, but what about those who are still struggling to get on the housing ladder in Britain's capital city?
Well, there was one chart nestled within the casebook that summed up exactly why it is nearly impossible to buy a property in Britain's capital - unless you have a rich family.
HSBC showed how London property prices are now nearly ten times more than what the average person in Britain earns.
This means that it is highly unlikely for a first-time buyer to get on the housing ladder unless they were helped out by cash-rich parents or grandparents, possibly coupled with government incentive schemes.
The latest data from the Office for National Statistics show that the average house price in London is at £525,000 ($804,000). The average annual earnings for an ordinary Briton is at £26,500 ($40,596). An entire year's average salary only equates to 5% of the price of a property. The average deposit to buy a house is 10%.
Even if a first time buyer took the government up on its Help to Buy scheme, which means the purchaser only has to give a 5% deposit and the government contributes another 15% of the price as a loan, they would have to save a lot of money on very little income.
On top of that, Britain's regulator installed mortgage affordability checks in 2014, which force lenders to test whether homebuyers are able to withstand a rise in interest rates. The Financial Conduct Authority makes banks effectively stress test a customer before granting them a mortgage in a scenario where interest rates rose from today's record low of 0.5%, to several percent higher.
So even if you have the deposit ready, you probably wouldn't be able to get a mortgage because your salary is too low to withstand a rate rise - you'd need the property to be part or fully bought with family money or a large windfall to bring down the mortgage requirement.