Housing affordability

One of the consistent problems for homebuyers - and especially first-time buyers and those wanting to upsize - is how much the property costs. The corollary to that is how much money they'll have to find to afford not only the deposit but also the monthly repayments required to manage the mortgage.

Every month, there are several metrics and measures that are produced by financial institutions and the Government that look at how house prices are changing, since this is a good barometer of how well the overall economy is doing - the more demand for properties, the more confident the prospective buyers are in affording the purchase, which means they are not drawing the horns in and keeping any savings for a rainy day.

Building society Nationwide publishes a report on housing affordability, which provides an insight into not only where the housing market is but where the house prices rises are in relation to average wage and salary - this is known as “house price to earnings ratio” (or HPER), and is a strong indicator of how much someone can afford on average earnings.

For the year just gone, Nationwide has noted that, while there has been a small positive change in the HPER, it is still a significant issue against the historic standards and the measure of affordability. By the end of 2024, Nationwide reported that the HPER was 5.0.

As the Senior Economist at Nationwide, Andrew Harvey, states:

“There has been a modest improvement in UK housing affordability over the last year, due to earnings growth marginally outpacing house price growth and a slight reduction in average borrowing costs. 

“Nonetheless, housing affordability remains stretched by historic standards. 

“A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay - well above the long-run average of 30%.

“Furthermore, house prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still far above the long run average of 3.9. 

“Consequently, the deposit hurdle remains high. 

“This is a challenge that has been made worse by the record increase in rents in recent years, which, together with the cost-of-living crisis more generally, has hampered the ability of many in the private rented sector to save.”

“Therefore, it's not surprising that a significant proportion of first-time buyers have to draw on help from friends and family to raise a deposit. 

“In 2023/24, around 40% of first-time buyers had some assistance raising a deposit, either in the form of a gift or loan from family or friends, or through an inheritance.”

When it comes to the best areas for affordability, Nationwide has published the following table (laid out by region and local authority):

Source: Nationwide

The top of that league table looks like this (top ten):

Source: Nationwide

Wherever you are considering buying your next property, it is clear that financing such a move continues to be a major undertaking in comparison with the experience of a number of years ago.

Therefore, you'll need to ensure that you keep a close eye on the expenditure to achieve your desire to buy that next home. 

There are so many things you'll need to consider and budget for, so you'll be glad to know that there is a value-for-money option on the legal side of things by opting for Homeward Legal, whose conveyancers will start work on your plans as soon as you agree to the quotation and appoint them to represent you. 

So, look no further than Homeward Legal.

Homeward Legal will also provide a quote that will not change - what you are quoted is what you pay for standard conveyancing process, which means you can effectively budget for your conveyancing needs.

There are some unforeseen items that might arise during the purchase and/or sale, which includes a specialist flood assessment report, but the solicitor discusses these and their cost as they come up. 

In addition, to protect the homebuyer further, Homeward Legal operates a ‘no completion, no fee' promise, which ensures that, should the purchase or sale not go through as planned to completion status, no payment is required.

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to move.

Or you can get a quick quote, using Homeward Legal's easy-to-use quote generator.