First-Time Buyers Find Over Half Of UK Properties Affordable

According to an annual study on housing affordability conducted by Post Office Money, over 50% of UK properties are located in areas that first-time buyers (FTBs) consider affordable.

The research, based on data from over 80 locations across the UK and collected by the Office for National Statistics, found that 56% of homes are in areas that would-be buyers judge to be within their means.

The findings come at a time when a number of statistics, including a house price index for August by Halifax, have indicated that UK house prices did not increase over the last six months.

This latest study replicates the findings of sluggish price growth in previous surveys, meaning that while the average UK property price now stands at £282,713, prices have increased by only 0.9% over the last year.

House prices still exceed incomes for FTBs

The study shows that while the average UK house price is 5.8 times greater than the average FTB’s income, some of the most affordable areas in the UK include the Greater Manchester towns of Oldham and Wigan, as well as Southampton and Blackpool.

In Blackpool, for example, while the average FTB in the North West region is believed to earn an annual income of £40,000, the average house price in the town is around £110,000. Post Office Money claims that this makes virtually every property in Blackpool affordable for FTBs.

However, FTB buyers in Warwick, although earning a similar income of £41,796, would be highly unlikely to find any properties affordable. This is because the average house price in Warwick is £305,000 and has increased in value by 5% over the last year.

UK’s affordable hotspots

Lincoln and Hull are also among the UK’s affordable ‘hotspots’, both cities having 100% of housing stock that is affordable for FTBs.

Over the last year, Rotherham saw the largest change in affordability for FTBs. Although the number of affordable properties has decreased by 18%, 79% of neighbourhoods in the city are still affordable for the average FTB, which means it’s still a worthwhile option for local would-be buyers.

The change has been fuelled by wage-growth in the area increasing the number of potential FTBs and driving demand.

Ipswich has seen the greatest increase in the number of properties in areas affordable to FTBs, an increase of 6% to 88% and a result of the trend for falling house prices in the South of England, the first time prices have fallen in the region since the recession in 2009.

Commuter towns unaffordable for many

FTBs are finding commuter towns increasingly unaffordable, especially in the South of England, in locations such as Surrey, Woking and Cambridge. And yet, Reading has managed to buck the trend, as the research demonstrates that rising wages and low prices in particular areas of the town have resulted in a 6% increase in properties that FTBs consider affordable.

Ross Hunter, Product Director of retail banking at Post Office Money has commented that although house price growth has been slow over the last year, property can still appear especially unaffordable for FTBs. And that in order to achieve their ambition of home ownership, young buyers still face the significant challenge of having to save for a deposit.

Hunter added that it remains evident that saving for and buying a property is not a straightforward process, although professionals in the property sector may be seeing the first glimmer of a ‘buyer’s market’. He concluded that fundamental to an FTB’s personal plan of action is the need to look for the most affordable areas in nearby towns and cities.

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