First-time buyer affordability across the UK has reached its highest level in a decade, according to new research by estate agency Yopa – despite a 63% rise in the average price of a first home over the same period.
The study compared average first-time buyer house prices with average annual earnings over the past ten years to assess how many years’ worth of income would be required to purchase a first home – a key affordability ratio.
In 2024, with average annual earnings standing at £31,717 and the average first-time buyer property priced at £226,744, the affordability ratio has returned to 7.1. This marks the lowest level since 2015, when the same ratio was also recorded, and is a significant improvement from a peak of 8.0 seen in both 2021 and 2022.
This improvement has been driven by stronger wage growth in recent years. Average earnings rose by 6.2% in 2023 and by 7% in 2024. At the same time, the average price of a first home fell by 2.7% in 2023, before rising more modestly by 4.7% in 2024.
SHIFTING DYNAMICS
Although house price growth has outpaced income growth since 2015 – up 63% compared to a 44% increase in earnings – the narrowing of the affordability gap in the past two years reflects shifting market dynamics, including a cooling in house prices and sustained wage increases.
Affordability, however, remains highly regional. London is the least affordable market for first-time buyers, with the average buyer requiring 12.4 times the typical annual income to secure a property. The South East (8.9), East of England (8.5), and South West (8.4) also exceed the national average ratio.
By contrast, Scotland ranks as the most affordable region, where first-time buyers require just 4.8 times the average annual income to purchase a home.
TOUGHER THAN EVER
Verona Frankish, Chief Executive of Yopa, says: “It’s fair to say that getting that first foot on the ladder has been no easy task at any point over the last decade and, now that the Help to Buy scheme has ended, it’s perhaps tougher than ever in some respects.
“However, the silver lining for today’s first-time buyers is that whilst the average price of a first home has increased substantially over the last 10 years, earnings growth has also improved considerably in the last three to four years.
“As a result, the current first-time buyer affordability ratio is at its lowest since 2015, although as always, the task of getting onto the property ladder is far harder in some regions versus others.”
