Buyers 'priced out' of half of Brtian's available housing

Just half of Britain's local authority districts can be considered 'affordable' for homebuyers, with the other half requiring a huge leap in earnings to be able to secure a mortgage.

Related topics:  Finance,  Property,  House Prices,  Affordability
Property | Reporter
2nd February 2023
FTB 622
"The cost of homeownership remains out of reach for the average buyer across half of all areas of Britain and that’s even with the additional purchasing power of two incomes, let alone those attempting to go it alone"

Research by the Gradual Homeownership provider, Wayhome, looked at the current purchasing power of homebuyers across Britain based on a joint mortgage application at two times the current average gross salary, the potential mortgage offer available to them at a lending multiple of four times this joint income, and the actual mortgage offer required based on the current average house price minus a 15% deposit.

The research shows that across Great Britain, the average person takes home a gross income of £33,545, meaning that those looking to secure a mortgage offer via a joint application, and with a combined gross income of £66,908, would be able to borrow £267,632 at four times their combined income.

The good news is that the current average house price currently stands at £298,333 in Britain and after placing a 15% deposit of £44,750, homebuyers need only borrow £253,583. This places them within the current threshold of borrowing affordability, albeit only just, with £3,512 to spare.

However, when analysing this gauge of property affordability at the local authority level, the research by Wayhome shows that just 51% of the British market can be considered affordable, meaning homeownership is unaffordable for homebuyers across half (49%) of the market.

London is home to the four most unaffordable markets in the land and also dominates the list of least affordable areas.

In Kensington & Chelsea, homebuyers would have to earn £138,994 more to be eligible to borrow enough to cover the current cost of property in the borough - even when making a joint application.

In Westminster, they would need to see their earnings increase by over £85,000 to make it across the mortgage affordability threshold, while in Camden and Islington, they would need to earn £82,823 and £61,132 more respectively.

The South East’s Epsom & Ewell is the next least affordable market and least affordable outside of London, with homebuyers making a joint mortgage application having to boost their income by £53,899 in order to secure the required mortgage offer.

Elsewhere across Britain, the least affordable areas for homebuyers in the current market, and where they need to see the largest increase in incomes in order to boost their borrowing ability, are as follows: -

East of England - Hertsmere: £49,888 income increase required.
South West - Cotswold: £39,359 income increase required.
East Midlands - Derbyshire Dales: £17,335 income increase required.
West Midlands - Wychavon: £16,479 income increase required.
Wales - Monmouthshire: £11,620 income increase required.
Yorkshire and the Humber - Ryedale: £11,294 income increase required.
North West - Trafford: £8,156 income increase required.
Scotland - East Lothian: £3,128 income increase required.

The North East is the only region of Britain where buyers can currently afford to purchase a property across all local authorities without the need to boost their earnings to qualify for a mortgage.

Nigel Purves, Co-founder and CEO of Wayhome, commented: “It’s arguably never been tougher to get a foot on the property ladder, with homebuyers seeing the cost of homeownership climb to record highs in recent times. At the same time, wage growth has failed to keep pace, while the cost of borrowing has also increased following a string of successive interest rate hikes.

"As a result, the cost of homeownership remains out of reach for the average buyer across half of all areas of Britain and that’s even with the additional purchasing power of two incomes, let alone those attempting to go it alone.

"While this issue is predictably more prevalent within London and the South East, it’s certainly not confined to these two regions, with the problem of property affordability impacting buyers up and down the nation.

"Anyone who can afford to secure a mortgage for the home they want in the area they want should certainly do so. But for those of us who aren’t in such a fortunate position, there needs to be another more accessible option.

"And with government-backed schemes like Help To Buy falling by the wayside or severely limiting buyer choices, other options such as Wayhome’s Gradual Homeownership are sorely needed to help tackle the issue head-on.”

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