It can be tricky for first time buyers

First-time buyers are dealing with significant affordability gaps across Britain, with properties in some regions costing approximately double the local salary, and up to 14 times average incomes in other areas, according to an analysis.

Cambridge, alongside Oxford, York and Cardiff, has been identified as one of Britain’s most unaffordable places for first time buyers to climb the property ladder.

Whereas, Inverclyde in Scotland has been pinpointed by Nationwide as the most affordable location for individuals stepping onto the property ladder, with the average first-time buyer home costing 2.3 times local earnings.

Burnley and Hartlepool were also highlighted by Nationwide Building Society as among the most affordable places to get on the property ladder, with typical property prices in these areas costing just under three times the average local wage.

Andrew Harvey, Nationwide’s senior economist, said: “Inverclyde in Scotland is the most affordable local authority in Great Britain, with average first-time buyer house prices just 2.3 times average earnings in the area. Inverclyde includes Greenock and Port Glasgow and is also the cheapest area in Scotland, with average prices around £100,000. Burnley and Hartlepool remain the most affordable areas in the North West and North regions respectively.”

The London borough of Kensington and Chelsea was identified as the least affordable location in London and Britain, with a home typically costing 13.9 times local earnings. Mr Harvey added: “A 10% deposit on a first-time buyer property is £15,000 or less in (around) 10% of local authorities, whilst in nearly half of areas the average deposit is between £15,000 and £25,000.”

He said that approximately 70% of local authorities have experienced improved affordability over the past year. Nationwide utilised average first-time buyer property prices and local earnings data for average adult full-time workers to compile the calculations.

Adding to the difficulties facing prospective first-time buyers and homeowners, mortgage rates have been climbing in recent weeks amid shifting market expectations following the conflict in the Middle East.

Hundreds of mortgage products have also been pulled from the market as lenders have rushed to make adjustments. According to financial information website Moneyfacts, the average two-year fixed-rate homeowner mortgage available has increased from 4.83% at the beginning of March to 5.35%.

The average five-year fixed homeowner mortgage rate has climbed from 4.95% at the start of March to 5.39%.

Adam French, head of consumer finance at Moneyfacts, said: “Swap rates, which underpin mortgage pricing, have risen sharply following the decision (by the Bank of England on Thursday) to hold the base rate at 3.75%, with markets interpreting commentary from the Bank of England as leaving the door open to rate rises amid ‘Trumpflation’ fears.

“With two and five-year swaps now sitting at their highest level in more than a year, lenders are once again facing higher funding costs, and this will feed through into mortgage pricing.” He added: “Whilst a quicker resolution to the conflict in the Middle East could ease pressure on rates, the reality is that a more volatile world is a more expensive world. Even though the most competitive deals will remain below average, anyone looking to buy or remortgage this year needs to prepare for higher costs than previously expected.”

Mary-Lou Press, president of NAEA (National Association of Estate Agents) Propertymark, said Nationwide’s data “highlights a mixed picture for first-time buyers across the country”.

She added: “It is positive to see affordability improving in many areas, with around 70% of local authorities recording progress over the past year, which should help support market activity.

“However, significant regional disparities remain. Whilst some parts of the country are becoming more accessible to buyers, high house prices in areas such as London and the south east continue to create substantial barriers, particularly when it comes to saving for a deposit.”

James Nightingall, from property search service HomeFinder AI, said: “Prime central London boroughs including Kensington and Chelsea are particularly sought-after.

“Many first-time buyers are priced out and are looking in zones three to six for more affordable homes whilst others decide to continue to rent and save up a larger deposit.”

Below are the most affordable locations for first-time buyers across nations or regions, according to Nationwide, showing the average house price-to-earnings ratio:

• Scotland, Inverclyde, 2.3
• North West, Burnley, 2.8
• North, Hartlepool, 2.9
• Yorkshire, Kingston upon Hull, 3.0
• Wales, Merthyr Tydfil, 3.3
• West Midlands, Stoke-on-Trent, 3.4
• East Midlands, West Lindsey, 3.7
• East Anglia, Great Yarmouth, 4.3
• Outer South East, Gosport, 4.7
• Outer Metropolitan, Surrey Heath, 4.8
• South West, Swindon, 4.8
• London, Bromley, 6.2

Below are the least affordable locations for first-time buyers across nations or regions, according to Nationwide, showing the average house price-to-earnings ratio:

• London, Kensington and Chelsea, 13.9
• Outer South East, Oxford, 8.0
• East Anglia, Cambridge, 7.3
• Outer Metropolitan, Spelthorne, 7.0
• South West, South Hams, 6.9
• East Midlands, Derbyshire Dales, 5.7
• West Midlands, Stratford-on-Avon, 5.6
• North West, Trafford, 5.5
• Yorkshire, York, 5.4
• Wales, Cardiff, 5.3
• Scotland, Midlothian, 4.9
• North, Westmorland and Furness, 4.1