July 10, 2024 3:17 pm

Insert Lead Generation
Nikka Sulton

The cost of purchasing a home has seen a notable increase in recent years, impacting potential buyers across the UK. This rise in required income raises questions about affordability and accessibility in the housing market. Understanding these figures is crucial for anyone considering property ownership, especially in regions where housing costs have surged disproportionately to income growth. Identifying the most affordable areas to buy a home in the UK becomes a significant consideration amidst these changes, highlighting the ongoing challenge of balancing income levels with housing prices nationwide.


Key takeaways

First-time buyers now require an income of £60,600, which equals the combined average salaries of two individuals, to purchase a home. Homeowners seeking to upsize must earn £72,600 collectively to afford a property at the current average price. Over the past year, the income threshold for first-time buyers has risen by £2,400, while upsizing homeowners face an increase of £3,400.

Regions in northern England and Scotland are highlighted as the most affordable areas for property purchases on lower incomes, reflecting varying affordability challenges across the UK.

Affordability poses a significant challenge for prospective homebuyers, with the ability to secure a mortgage heavily reliant on household income alongside deposit savings. This income assessment is crucial in determining mortgage affordability.

First-time buyers typically face lower deposit capabilities compared to existing homeowners aiming to move into larger properties. Higher deposits generally translate to lower income requirements for purchasing.

Statistics indicate that first-time buyers typically secure mortgages equivalent to 3.3 times their household income, while existing homeowners seeking larger homes average around 3 times their income. Based on these ratios and the current property prices listed on Zoopla, we can compute the necessary household incomes for both groups.

For instance, a first-time buyer eyeing a home priced at £250,000, with an average 20% deposit, now requires an annual household income of £60,600—an increase of £2,400 from last year. Meanwhile, homeowners looking to upsize to a property priced at £335,000, with a 35% deposit, now need a household income of £72,600, marking a £3,400 rise over the past year.

According to the Office for National Statistics (ONS), the average UK household income stands at £33,300. This means that a combined income of £66,600 from two average earners would suffice to afford a typical first-time buyer property. However, homeowners in the same income bracket may find it challenging to secure a larger property without a more substantial deposit.


First-time buyers need two average salaries to buy

First-time buyers often enter the market with smaller deposits, typically averaging around 20%, according to the Office for National Statistics (ONS). To enhance affordability, they often target more affordable properties. For instance, the average price of a home chosen by a first-time buyer is 34% lower than the market average.

The income required for a first-time buyer varies significantly based on regional property values. In Northern England and Scotland, prospective buyers generally need lower incomes compared to those in the Midlands, Wales, or Southern England.

In the North East, which offers the most affordable entry point for first-time buyers in the UK, a typical property costs £120,000, necessitating an income just under £29,100. In places like Hartlepool, where properties around £80,000 are popular among first-time buyers—often small flats or renovation projects—the income requirement drops to only £19,400.

Scotland follows closely with an average required income of £31,500 for first-time buyers. In areas like Ayrshire, savvy buyers can secure homes with a household income of under £20,000.

Moving southwards in England, affordability diminishes. The Midlands sees first homes priced below £200,000, requiring incomes below £49,000. In Southern England, the income needed varies widely, from £33,900 in Great Yarmouth to a substantial £193,900 in Kensington and Chelsea.


Upsizing homeowners need an income of £72,600 to buy

For homeowners looking to move up the property ladder, higher house prices require higher incomes. The average asking price of a home listed for sale on Zoopla is currently £335,000. Buyers aiming for such a property with a 35% deposit would need a household income of £72,600.

In Northern England, those aiming to purchase an average-priced home ranging from £200,000 to £335,000 typically need incomes between £31,400 (Blackpool and Hull) and £78,000 (Trafford in Manchester).

Moving to Scotland, where the average home costs around £200,000, requires a household income of £43,300. However, income requirements vary significantly from £27,100 in East Ayrshire to £62,800 in East Lothian.

In the Midlands or Wales, homeowners looking to upsize generally need incomes above £54,000. But in areas like Blaenau Gwent (£32,500), Stoke-on-Trent (£39,000), Bolsover (£46,600), and Boston (£46,600), the income threshold is lower.

Down South, homeowners in larger cities typically face higher income requirements due to higher property values often exceeding £300,000. However, smaller cities such as Plymouth (£52,000), Norwich (£54,200), Peterborough (£56,300), Portsmouth (£57,400), and Southampton (£58,500) offer opportunities to buy on a lower income.

In London, where property prices are highest, the average income needed for upsizing is £124,600. Yet, in areas like East London (Barking and Dagenham, Havering, Newham) and South East London (Croydon, Lewisham, Bexley), incomes below £100,000 may suffice for purchasing an averagely-priced home.


Why are the required incomes to buy so high in 2024?

The required income for purchasing a home has risen by 4% over the past year, driven largely by higher asking prices and a slight decrease in the loan-to-income ratio.

Buyers facing these challenges can opt to increase their deposit size to reduce the mortgage amount. Alternatively, expanding the search area or considering different property types could offer practical solutions.

Our analysis indicates that few first-time buyers are compromising on their property preferences as they navigate complex family needs. To maximize affordability, many are broadening their search radius and exploring diverse housing markets.

In southern England, where affordability pressures are pronounced, two out of five buyers are extending their search beyond a 10-mile radius to find suitable homes.


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