An analysis by Yopa suggests that first time buyer affordability is at the best level in 10 years, which the estate agency says has been driven by an increase in average annual earnings.
This is despite the fact that the average price of a first home has increased by 63% in the last decade, whilst the average income has climbed by just 44%.
Yopa’s analysis of average house prices, based on the government’s UK house price index, found that although there was an overall increase of 63% for the 10-year period, there was a decline of 2.7% in 2023 and a slower rate of growth in 2024, at 4.7%.
An analysis of ONS employee earnings data for the same period reveals an increase in annual average income of 44%. However, while house prices dipped in 2023, income rose by 6.2%. And, while there was a house price growth rate of 4.7% in 2024, average earnings outstripped that, at 7%.
Using Yopa’s house price to income affordability ratio, calculated using the number of years of average income would be required to cover the average price of a first home, the 2024 total is 7.1 (£226,744 to £31,717) – the most favourable since 2015, which had the same amount. The analysis finds a peak of 8.0 in 2021 and 2022, before it fell to 7.3 in 2023.
‘Of course, first-time buyer affordability does differ drastically depending on where you’re looking to buy your first home,’ Yopa acknowledges in its report.
CEO Verona Frankish added:
“It’s fair to say that getting that first foot on the ladder has been no easy task at any point over the last decade and, now that the Help to Buy scheme has ended, it’s perhaps tougher than ever in some respects. However, the silver lining for today’s first-time buyers is that whilst the average price of a first home has increased substantially over the last 10 years, earnings growth has also improved considerably in the last three to four years.
London remains the least affordable market, where the average first time buyer needs 12.4 times the average annual regional income to cover the value of a first home. In the South East that drops to 8.9, with 8.5 in the East of England and 8.4 in the South West. Scotland is the most affordable area, with the average first time buyer house price 4.8 times the average annual regional earnings.
