"It’s fair to say that getting that first foot on the ladder has been no easy task at any point over the last decade and, now that the Help to Buy scheme has ended, it’s perhaps tougher than ever in some respects"
- Verona Frankish - Yopa
New analysis from Yopa reveals that while the average price of a first home has surged by 63% over the past decade, first-time buyer affordability has reached its best level in 10 years, driven by substantial growth in average annual earnings.
Yopa's latest study compared the average first-time buyer house prices with the average annual earnings over the past 10 years to calculate how affordable it is for first-time buyers to purchase a home, using the income-to-house-price ratio (known as the affordability ratio). This ratio measures how many years of income are required to cover the cost of an average first home.
In 2024, with the average annual income at £31,717 and the average first home priced at £226,744, the affordability ratio stands at 7.1. This means it would take 7.1 years of income to buy the average first home. This marks the best affordability ratio in the last decade, matching the 7.1 ratio seen in 2015 despite the significant 63% rise in house prices during this period. Over the same time, average income has grown by only 44%.
The research shows that the affordability ratio for first-time buyers has generally increased since 2015, peaking at a decade-high of 8.0 in 2021 and 2022. However, the ratio has gradually improved in recent years, dropping from 7.3 in 2023 to 7.1 in 2024.
This improvement is mainly attributed to stronger income growth, with the average income rising by 6.2% in 2023 and 7% in 2024, compared to a decline in average first-time buyer house prices in 2023 and slower price growth in 2024.
Regional affordability varies widely. London remains the least affordable market, where first-time buyers need 12.4 times the regional average annual income to cover the cost of a first home. The South East (8.9), East of England (8.5), and South West (8.4) also have affordability ratios above eight times regional earnings.
On the other hand, Scotland offers the most affordable option for first-time buyers, with the average house price only requiring 4.8 times the regional annual income.
“It’s fair to say that getting that first foot on the ladder has been no easy task at any point over the last decade and, now that the Help to Buy scheme has ended, it’s perhaps tougher than ever in some respects," comments CEO of Yopa, Verona Frankish.
However, she adds, "The silver lining for today’s first-time buyers is that whilst the average price of a first home has increased substantially over the last 10 years, earnings growth has also improved considerably in the last three to four years,"
"As a result, the current first-time buyer affordability ratio is at its lowest since 2015, although as always, the task of getting onto the property ladder is far harder in some regions versus others.”
