First-time buyers in London need to spend 13 times their earnings to get on the property ladder, according to the latest figures.
Data from the Office for National Statistics (ONS), which looked at affordability in last year’s market, revealed those buying their first property in the North East were expected to spend five-and-a-half times their earnings on their home.
London, the report showed, was the least affordable region for prospective first-time buyers in 14 of the last 19 years, and the North East had the most inexpensive house prices for 18 of the last 19 years.
Ross Boyd of mortgage platform, Dashly, said spending 13 times your earnings simply to get onto the property ladder was ‘borderline obscene’.
He added: “While average UK house price growth has been slowing for some time now, the sheer lack of supply means prices are being propped up and that’s contributing to the continued lack of affordability in certain areas of the country.”
Meanwhile the ONS First-Time Buyer Housing Affordability report also revealed Wales was the third most affordable region, with buyers needing six-and-a-half times their earnings to get onto the property ladder.
A distinct north-south divide also emerged with areas such as the North of England and the Midlands being more affordable than the south east and south west.
Problem spreads beyond London
But with 78% of local authority areas emerging as more expensive in 2017 than in the previous year, experts are concerned the affordability problem is not just confined to London.
Laura Suter, personal finance analyst at AJ Bell, explained in 1999 house prices in London were around four times the average salary for first-time buyers. This has shot up leaving first-time buyers finding it harder to purchase home as wages fail to keep pace with ‘meteoric’ house price rises.
“While the North East remains the most affordable for those wanting to get on the property ladder,” she said, “a first-time home still costs five-and-a-half times the average salary of someone under the age of 30.
“Clearly no mortgage lender will let you borrow this much, and so first-time buyers are increasingly reliant on having a large pot of private savings to help fund their house purchases.”
She added: “Those wanting to get a foot on the ladder need to make the most of free Government money to help boost their savings pot.
“The Help to Buy ISA and Lifetime ISA give first-time buyers a 25% boost to their savings pot, up to certain limits.”
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