Hamptons International has launched a new quarterly affordability index measuring the pressures buyers face from changes in cost of living, interest payments and house prices.
The findings show ability to buy is now significantly better than at the start of the financial crisis (2008), with interest rates at historic lows and prices still 5 per cent below peak levels.
Low mortgage rates also mean ability to buy is better despite the fact that the amount of income left to some families after paying for essentials, is about six percent (£60 per month) lower today than at the time of the financial crash in 2008.
However rising house prices, stagnant wages and the rising cost of essentials have made it more difficult to buy in the last six months.
Fionnuala Earley, director of research at Hamptons International, comments:
“Over the last five years the post-tax income of a full time working couple has increased by just nine per cent, but rising costs mean that spending on essentials such as food, transport, childcare and utilities has increased by 28 per cent.
“Today, the income households with children have left after essential spending is about 6 per cent less than in 2008. Put simply there is less left in families’ bank accounts at the end of the month to service a mortgage, save for a deposit or spend on non-essentials.”
The index shows significant regional differences. Compared with 2007, ability to buy is much better everywhere in Great Britain except London, although growth in the capital is now easing.
Households with children are among the most constrained in their ability to buy. The average first time buyers’ ability to buy is still better than it was in 2007 – but this does not take into account the difficulty of raising a deposit.
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