More than half of two and three-bedroom houses for sale across Britain are now within reach of a household earning the average income as slower house price growth improves affordability.
Zoopla analysis shows 51% of two and three-bedroom houses are priced within reach of a household earning £53,500, up from 45% last year.
On Zoopla’s assumptions, such a household could afford a property listed at up to £301,000, based on borrowing 4.5 times gross annual income and providing a 20% deposit.
But improving affordability has yet to translate into stronger market activity, with mortgage rates now above 5% and sales agreed running 9% below last year’s level.
SOUTH CATCHES UP
Some of the biggest improvements have occurred in southern England, helped by income growth, greater housing supply and flat or falling prices.
The proportion of affordable two and three-bedroom houses in the South West has risen by 9.8 percentage points to 47%, while the East of England has recorded a 9.2 percentage point increase to 39%.
The South East has improved by 7.7 percentage points, although only 23% of two and three-bedroom houses are below Zoopla’s £301,000 affordability threshold.
London remains significantly less affordable, with fewer than 100 qualifying houses and just 0.5% of the market falling below the threshold.
By contrast, 83% of two and three-bedroom houses in the North East are considered affordable, followed by Scotland at 80% and Yorkshire and the Humber at 76%.
AFFORDABILITY HOTSPOTS
Zoopla also identified towns where buyers on average household incomes have a particularly wide choice.
Every two and three-bedroom house currently listed in Keith, Alloa, Kilwinning and Arbroath in Scotland falls below the £301,000 threshold.
Bootle in the North West has 98% of properties within reach, while Treorchy and Newtown in Wales both stand at 97% and Immingham in Yorkshire and the Humber at 95%.
There are also pockets of greater affordability in southern England, including East Cowes on the Isle of Wight, where 77% qualify, Leiston in Suffolk at 87% and Par in Cornwall at 83%.
Across the affordability hotspots identified by Zoopla, the average asking price is around £189,000 compared with £293,200 across Britain.
“The impact is being offset by higher mortgage rates.”
Richard Donnell (main picture, inset), Executive Director at 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.”
He adds: “We expect house prices to continue to rise more slowly than incomes which will continue to help improve the affordability of housing.
“A greater choice of homes for sale is supporting a buyers market and means that sellers are having to be more realistic on price.”
