Government stealth taxes are pushing London's property market even further out of reach for first-time buyers, new research has found.

According to an analysis by Moneyfacts, freezes on tax bands and thresholds mean the average home in the capital now costs an eye-watering 14.7 times average earnings once stamp duty, national insurance and income tax are taken into account.

That burden is more than double the level facing first-time buyers in other English regions, including the North West, the North East and Yorkshire, and is also well above the burden in the South East and the South West.

The findings show that the difficulty of getting on the property ladder is considerably worse than government statistics suggest, because official figures only compare regional property prices as a multiple of gross earnings. Once tax is factored in, the sheer scale of the affordability gap between London and the rest of the UK becomes clear.

The effect is a product of what economists call fiscal drag: when thresholds are frozen while wages and prices rise, more income is pulled into tax over time without any explicit change in rates. London's higher salaries mean the capital's workers are particularly exposed, as frozen bands bite harder at higher earnings.

First-time buyer stamp duty relief has failed to keep pace with property price inflation, leaving most London homes above the £500,000 relief cap. As a result, first-time buyers in the capital face an average bill of £16,350 after getting the keys to their first home.

Freezes on other taxes, including the personal allowance – the tax-free income tax band – and the higher rate bands, have disproportionately affected younger workers in London, hampering their ability to save and limiting their capacity to borrow.

Moneyfacts calculates that buying a typical London home now requires around £70,000 in up-front cash to cover larger deposits and substantially higher stamp duty charges – equivalent to more than 12 years of saving for the average Londoner.

Adam French, Head of Consumer Finance at Moneyfacts, said: "With income tax thresholds frozen and the UK tax burden heading towards a historic high, many workers are keeping less of every pay rise before they even begin saving for a home.

"Combined with high prices and limited housing supply, the tax system is becoming another significant barrier to homeownership for aspirational Londoners."

Construction slump

The analysis comes as housebuilding in the capital falls to fresh lows, choking off supply for young people trying to get on the property ladder.

Construction began on just 5,547 new private-sector residential homes in 2025, a drop of more than 80 per cent compared with a decade earlier. City Hall estimates suggest London needs as many as 88,000 new homes a year to keep pace with demand.

"More flexible borrowing rules and an increase in housing supply can all be part of the solution," French said.

"However, for many aspiring first-time buyers in London the challenge right now is finding enough financial headroom to save amid a combination of rising living costs and a creeping tax burden which is slowly squeezing their finances."