Half of family homes affordable on an average income

More than half of family homes for sale are within reach of a household on an average income, it has been revealed.

The findings by Zoopla suggests that 51% of two and three-bedroom houses are listed with an asking price below £301,000. It is up from 45% a year ago.

The £301,000 figures is the most that a household on a combined income of £53,500 can afford.

This is based on a mortgage of 4.5 times income and a deposit of 20%.

It means 84,300 houses are within reach, with rising incomes outpacing house price growth.

In spite of the improvement, sales agreed are 9% lower than a year ago.

Zoopla says that rising mortgage rates are adding to monthly costs and denting confidence.

Regional differences

The biggest improvements are in southern and eastern England, where prices have been flat or falling while incomes have risen.

In the South West, the share of affordable houses jumped 9.8 percentage points to 47%. The East of England rose 9.2 percentage points to 39%.

Northern regions saw smaller gains because most stock was already affordable.

The North East leads at 83%, followed by Scotland at 80% and Yorkshire and the Humber on 76%.

The South East remains a constraint at 23%, with an average asking price of £375,000. London has fewer than 100 two and three-bedroom houses priced below the threshold.

A greater choice of homes for sale is supporting a buyers’ market.”

Richard Donnell, executive director of Zoopla, says: “The number of two and three-bedroom houses within reach of households on an average income has increased as incomes continue to rise faster than house prices.

“However, the impact is being offset by higher mortgage rates which are adding to the monthly costs of taking out a new mortgage.

“A greater choice of homes for sale is supporting a buyers’ market and means that sellers are having to be more realistic on price.”

Industry reaction

Nathan Emerson, Chief Executive of Propertymark, says: “While the increase in homes within reach of average-income households is encouraging, affordability on paper does not necessarily mean buying is financially achievable.

“Mortgage rates, deposit requirements and the wider costs of purchasing remain significant barriers for many prospective buyers.

“Ultimately, improved affordability is a positive step, but turning this into homeownership depends on access to suitable properties, realistic pricing and the ability to secure finance. The reality for individual buyers will always depend on their financial circumstances and where they want to live.”

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Author: Gemma