Getting on the property ladder in London is hard enough, but the cost of living in 2026 is adding another layer of difficulty. When it feels like daily expenses are always on the rise, the question of whether you’ll ever be able to buy your own place is no doubt on your mind.
This guide breaks down what’s happening with property prices, mortgage rates and everyday costs, and explains how Pocket makes homeownership more achievable than you might think.
The struggles of first-time buyers
Property prices and the deposit gap
Data from the Office for National Statistics shows that the average property price for a first-time buyer in London reached £463,000 in February 2026. Based on this figure, a 20% deposit would amount to £92,600. Add that on top of the cost of living in the capital, and it’s no wonder so many first time buyers feel stuck in a cycle of renting while trying to save.
Everyday costs are still high
While inflation has eased from its October 2022 peak, when it reached a 41-year high of 11.1%, the cost of daily essentials remains higher than pre-crisis levels. As of April 2026, inflation sits at 3.3%, which is still above the Bank of England’s (BoE) 2% target.
Food and energy bills continue to be a significant household expense. Food prices are on track to rise by 50% by November 2026 since the start of the cost of living crisis. Meanwhile, the Ofgem energy price cap is set to rise by 13% from £1,641 to £1,862 for the period from 1 July to 30 September 2026. Plus, analysts predict consumers will face higher energy costs later in the year due to the economic impact of conflict in the Middle East.
All of this makes affording to buy feel increasingly out of reach. But understanding what’s happening with mortgage rates is an important part of the picture. It can help you decide whether now is a good time to make the move from renting to buying.
Mortgage rates in 2026
Where the base rate stands
At its April 2026 meeting, the BoE held the base rate at 3.75%, after a series of cuts from the peak of 5.25% in August 2023. This matters for first time buyers because it directly influences the interest rates that mortgage lenders offer on loans.
However, the actual rate you’re offered will also depend on your deposit size, income and the lender’s assessment of your finances, so speaking to an Independent Mortgage Adviser is always the best first step. We recommend Censeo for tailored guidance.
Fixed mortgage rates offer predictability
One useful aspect of buying compared to renting is the ability to lock in your mortgage rate. Most buyers fix for two or five years, which means that even if the wider cost of living rises, your mortgage repayments stay the same over the fixed term. When other household costs feel unpredictable, a fixed mortgage rate offers some welcome certainty.
The case for getting on the ladder
How Pocket Living can help
Despite economic volatility, there is a way to buy your first home. Affordable housing options like Pocket have helped thousands of first time buyers step on the ladder.
We develop new build homes specifically designed for first time buyers. We call them city makers – people on middle incomes who are often priced out of buying on the open market and need a leg up on the London property ladder.
That’s why we sell Pocket homes at a 20% discount, with 100% ownership. This lower purchase price means you need a smaller deposit and mortgage, which can make a big difference to your monthly expenses when other household costs remain high.
New builds and energy efficiency
Buying a new build Pocket home also means lower energy costs from day one. According to the Home Builders Federation’s February 2026 ‘Watt a Save’ report, new build homeowners spend an average of £1,574 per year on energy, compared to around £1,995 for those in older properties. That’s a saving of around £420 a year, or over £35 a month. Pocket homes are built for energy efficiency, so you can enjoy lower bills from the moment you move in.
Take the next step
If you’re a first-time buyer trying to work out whether getting on the property ladder right now is realistic, considering the cost of living in 2026, the answer depends on your financial circumstances. But for Londoners who qualify, Pocket homes represent one of the most affordable routes to ownership, with 20% off the home’s market value and an energy-efficient design working in your favour from day one.
View our developments to explore your options and create a My Pocket account to register your interest in homes you may be eligible for.