A new index has revealed a stark affordability crisis for first-time buyers.
According to the Skipton Group, which includes the Connells lettings agency chain, only one in eight potential first-time buyers can afford the average first-time buyer (FTB) home in their area.
The situation is particularly dire for households in the bottom quarter of earners in Britain, making less than £22,850 annually. For these households, fewer than one in 100 can afford to take the first step on the property ladder in their local area. Even among those earning over £71,250 (the top quarter of all earners), only 44% can afford to buy their first home locally.
Nearly 80% of potential first-time buyers lack sufficient savings for a deposit, and almost four in 10 renters spend 45% or more of their income on essential housing costs, making it even harder to save.
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The affordability crisis is worst in the West Midlands, Wales, and London. In the West Midlands, low deposit levels and moderate house prices are to blame. Wales suffers from lower income levels, while London’s high house prices are the main culprit. Conversely, first-time buyers have better prospects in Scotland, thanks to lower house prices, and the East of England, due to favourable income-to-house price ratios.
Despite some improvement during the pandemic, overall housing affordability has plummeted during the cost-of-living crisis and remains at pre-2020 levels, with little sign of improvement.
Skipton Group chief executive Stuart Haire emphasised the need for a deeper understanding of housing affordability, beyond just house prices, income, and rent. He called for collaborative and targeted interventions to support aspiring homeowners, urging the government to work across departments, sectors, and industries to tackle this pressing issue.
“For some, our findings paint a bleak picture, notably for first-time buyers,” Haire said. “We stand ready to be part of those efforts.”
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