Middlesbrough has been named the most affordable location for first-time buyers in a new index comparing property prices, mortgage payments, rents and local earnings.
Pepper Money’s analysis placed Burnley second and Merthyr Tydfil third, followed by Cumberland and County Durham.
Middlesbrough’s average first-time buyer property cost £123,831, producing an estimated monthly mortgage payment of £607. This was calculated to be £157 below the area’s average rent, representing an annual difference of £1,882.
Burnley offered the lowest estimated deposit requirement among the leading locations at £11,595, while its modelled mortgage payment was £114 a month below the corresponding rent.
NORTHERN AFFORDABILITY
Thirteen of the index’s top 20 locations were in North East or North West England, reflecting the lower property prices found across many northern markets.
The average mortgage payment modelled for the North East was £699 a month, compared with a stated national average of £1,310. Every area in the region apart from Northumberland produced a lower mortgage payment than its local rent.
Pepper Money found that mortgage payments represented approximately 24% of monthly earnings in County Durham, Middlesbrough and Hartlepool.
In the North West, buying costs were lower than renting in 69% of the areas analysed. However, affordability varied considerably, with Trafford recording an average first-time buyer price of £306,330.
CITY RENT SAVINGS
Southampton produced the index’s largest modelled saving, with mortgage payments calculated to be £327 a month—or £3,924 annually—below local rent.
Manchester and Salford also generated estimated annual differences exceeding £3,000. In Manchester, an average rent of £1,406 was compared with a modelled mortgage payment of £1,142.
Nine of the top 10 locations produced mortgage payments below local rents. Rugby was the exception, with renting calculated to be £44 cheaper each month, but it retained sixth place because of median earnings exceeding £41,000 and its relatively favourable house price-to-earnings ratio.
COSTS BEYOND THE MORTGAGE
Across the full study, Pepper Money estimated that buying produced a lower monthly payment than renting in 41% of the areas examined. A further 94 locations cost less than £100 a month more to own.
However, the comparison does not mean buying will necessarily be cheaper for every household. Mortgage payments depend on the deposit, interest rate and term available, while buyers must also budget for transaction costs, insurance, maintenance and repairs.
The research identified Burnley as having the lowest average starter-home price at £115,953, followed by Hartlepool at £118,879 and County Durham at £120,933.
