Just 1 in 8 first-time buyers can purchase the average property in their area

Only 1 in 8 potential first-time buyers in Great Britain can purchase the average first-time buyer property in their area, based on their own financial situation, falling to just 1 in 100 for those earning £22,850 a year or less, according to new research from The Skipton Group.

Even among those earning over £71,250 a year, only 44% can afford to buy their first home in their local area, The Skipton Group Home Affordability Index reveals.

The Index combines data on the affordability of purchasing a property, with the affordability of running one into a single metric. Created in partnership with Oxford Economics, it utilises data from across Skipton Group businesses, the Office for National Statistics, the Bank of England and third-party external sources.

It shows that almost 80% of potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area. In addition, nearly 4 in 10 renters are spending 45% or more of their income on essential housing costs, creating a major barrier to saving for a deposit.

First-time buyers’ affordability levels are worst in the West Midlands (driven by a combination of low deposit levels and moderate house prices), London (due predominantly to the high levels of house prices) and Wales (where lower income levels reduce households’ buying potential).

In contrast, first-time buyers face the best prospects in Scotland (driven by lower house prices) and the East of England (due to above-average income to house price ratios).

Despite improving during the pandemic, overall housing affordability has fallen over the course of the cost-of-living crisis and, despite its recent recovery, sits almost exactly where it was at the beginning of 2020, with limited signs of improvement on the horizon.

Skipton Group CEO, Stuart Haire, said: “Being able to have somewhere to call home is widely recognised as one of the most important issues facing millions of people up and down the country. But to fully understand the problem, we felt we needed to move beyond the examination of house prices, income, and rent to a deeper understanding of what is driving overall housing affordability. That’s why we created the Home Affordability Index.

“For some, our findings paint a bleak picture, notably for first-time buyers. The combination of high housing costs, insufficient savings, and significant regional disparities underscores the urgent need for collaborative and targeted interventions to support aspiring homeowners.

“The scale of challenge of housing affordability is so great that no one person can lead that charge, so we are calling on the government to work cross department, cross Whitehall, cross sector and cross industry, so that together we can really start to solve an issue that impacts so many people. We stand ready to be part of those efforts.”