Halifax Reveal Most Affordable Places for First Time Buyers

A report published by mortgage lender the Halifax has revealed the best and worst places for first time home buyers based on the difference between average house prices and average earnings.

According the the Halifax’s data, the most affordable area for firs time buyers is East Dunbartonshire, north of Glasgow in Scotland, where the average property costs £97,089, amounting to 2.6 times the average annual income for residents of the area.

The next most affordable area was Copeland, West Cumbria with an average house price to annual earnings ration of 2.9:1. Five of the most affordable areas were in Scotland, with East Dunbartonshire joined by East Renfrewshire, West Dunbartonshire, Stirling and North Lankashire.

At the other end of the scale, every single one of the top ten least affordable areas was in London, topped by Brent in North London where, on average, a first time buyer will spend 12.5 times their annual income on their property.

Brent was joined in the top five by Hackney, where the average property costs 12 times average earnings, Haringey at 11.6 times, Hammersmith and Fulham at 11. times and Waltham Forest in North East London, at 10.9 times.

According to Halifax, the average UK property currently costs around £200,000, with the divide between

Halifax data showed that the number of first time buyers has increased recently, with 154,200 purchases completed over the first half of this year, showing a 10% increase on the 140,500 completed in the first half of 2015. Going back slightly further, the number of successful first time buyers is double what it was in the first half of 2009, when 72,700 purchases were completed - a record low for the market.

Current levels are still below the pre-crash highs reached in 2006, and separate government data released earlier last week shows that with the timeframe increased even further, the picture doesn’t look particularly positive.

The government’s report showed that the number of first time buyers completing purchases in 2014/15 was 564,000 - more than 30% lower than the 815,000 seen in 1994/95. Over that same period, average property prices across the UK more than tripled.

While the government’s data depicts a lengthy downturn in the market for first time buyers, Halifax’s data covering the last few years does point to something of a resurgence. Affordability is still stretched, particularly for younger first time buyers, but schemes like Help to Buy are doing their bit to help the situation.

Halifax’s mortgages director, Chris Gowland, expalined: “There was a further increase in the number of first time buyers in the first half of the year with the total exceeding 100,000 in the first six months of each year since 2012. This rise has been broadly in line with a general improvement in market activity and is likely to have been helped by government measures including the Help to Buy scheme.

“Although numbers remain below their previous peaks and many potential first time buyers are facing escalating house prices and deposit sizes, record low mortgage rates continue to make buying seem a more attractive option than renting.”

Mortgage rates have been falling in the wake of the Brexit vote, as many lenders factor in a potential cut to the Bank of England’s base rate in the near future into their pricing. This means that fixed rate deals are particularly attractive at the moment, and mortgages with higher loan to value ratios (and therefore smaller deposits being required) are much easier to find than they were five years ago.