The soaring cost of property has meant the amount those stepping onto the housing ladder must earn has increased by 9% in just three years.
And it also revealed the average deposit required by a first-time buyer who wants to purchase in one of the UK’s cities is more than £38,000, the Zoopla UK Cities House Index has revealed.
Despite these increasing financial pressures, first-time buyers accounted for the biggest number of home purchases in 2018 according to Zoopla. It focused its research on this group because it had been an important driver in the growth of housing sales.
It explained the absolute level of household income to buy a home impacted the potential pool of buyers and the demand for housing and therefore affected house price growth.
Richard Donnell, research and insight director at Zoopla, explained first-time buyers were an important group accounting for more than one in three sales.
London, Oxford and Cambridge
However, the study also highlighted regional differences and – in particular – areas where house price growth had started to slow, offering opportunities for new buyers to the market.
Indeed in the UK’s most expensive cities – London, Oxford and Cambridge – the income required for would-be purchasers had fallen by 5% since 2016.
Zoopla revealed first-time buyers looking for their first home in the capital needed an average income of £84,000, which is £3,250, less than the amount required in 2016 when the market hit the highest point since the financial crisis.
Donnell said: “While the average household income to buy a typical home across UK cities has grown 9% since 2016, weaker price growth and recent price falls have led to a 5% reduction in the income to buy across the most expensive cities.
“It will come as a modest relief for would-be buyers although the income to purchase still remains relatively high. While it is a factor behind weaker house price growth it supports underlying demand for rental homes.”
Liverpool – most affordable
Zoopla’s study found the average income a first-time buyer needed to purchase a typical property ranges from £26,000 in Liverpool up to £84,000 in London.
Liverpool also registered the highest house price increases growth of all the 20 cities in Zoopla’s survey. This was despite it being the most affordable market for first-time buyers to enter.
The average first-time buyer deposit in Liverpool is 18,449 compared to £119,000 in London.
Donnell added: “Affordability remains attractive in many regional cities where house prices have not registered the gains seen in south eastern England.
“Liverpool has the lowest income required to buy and has the highest rate of price growth at 5%. We expect prices to continue to increase in cities where housing is in reach of those on average incomes.”
