Inverclyde has been named the most affordable place in Great Britain for first-time buyers.
Despite signs that overall affordability is improving latest analysis from Nationwide highlights more than ever the widening divide between property markets in the North and South.
The Scottish local authority now has the lowest house-price-to-earnings ratio in the country, while Burnley and Hartlepool also rank among the cheapest locations for those trying to get on the housing ladder.
At the other end of the scale, Kensington & Chelsea remains the least affordable area in Britain, with buyers facing prices almost 14 times average earnings, highlighting the continued barriers to entry across London and parts of the South East.
SLOWER PRICE GROWTH
The figures also show affordability has improved in around 70% of local authorities over the past year, helped by slower house price growth and rising wages, although the gap between the most and least affordable areas remains stark.
Across Britain, a typical 10% deposit for a first-time buyer property sits between £10,000 and £25,000 in more than half of all local authorities, but in parts of London deposits of more than £40,000 are still common.
GREATEST GAP
Andrew Harvey, Nationwide’s Senior Economist, says: “London continues to have the greatest gap between the most and least affordable areas within the region by a considerable margin.
“Meanwhile, the North has the smallest difference between highest and lowest house price to earnings ratios (HPERs) by local authority area.
“Kensington and Chelsea is the least affordable local authority in London and, by extension, Great Britain, with a HPER of 13.9.
“Inverclyde in Scotland is the most affordable local authority in Great Britain, with average first-time buyer house prices just 2.3 times average earnings in the area.
“Around 70% of local authorities have seen an improvement in affordability over the last year… Nonetheless, house prices remain elevated relative to earnings, especially compared with other parts of the country.”
REGIONAL DISPARITIES
Mary-Lou Press (main picture, inset), President of NAEA Propertymark (National Association of Estate Agents), says: “This latest data highlights a mixed picture for first-time buyers across the country.
“It is positive to see affordability improving in many areas, with around 70% of local authorities recording progress over the past year, which should help support market activity.
“However, significant regional disparities remain. While some parts of the country are becoming more accessible to buyers, high house prices in areas such as London and the South East continue to create substantial barriers, particularly when it comes to saving for a deposit.”
CHALLENGING ENVIRONMENT
She adds: “The finding that a 10% deposit falls between £10,000 and £25,000 in over half of local authorities is encouraging, but many aspiring homeowners will still find it challenging to save amid wider financial pressures.
“To maintain momentum, it is essential that housing supply increases, access to competitive mortgage products is supported, and planning systems are fit for purpose so that more of the right homes can be delivered where they are needed.”
SQUEEZED BUYERS
Tom Bill, Head of UK Residential Research at Knight Frank, adds: “Affordability continues to shape the map of UK house price growth, with regional parts of the country having slowly narrowed the gap with London over the last decade.
“With buyers increasingly squeezed by prices in the capital, they have found more value in other parts of the country, which has been made easier by blue chip companies setting up regional operations.
“The pandemic accelerated the trend by encouraging a greater work/life balance and tilting the economy itself towards areas outside London with the growth of sectors like life sciences and logistics.”
PRICED OUT
And James Nightingall of property search service HomeFinder AI, says: “As a world capital, London has always experienced heightened demand from buyers and property investors which is contributing to higher than average property prices.
“Prime Central London boroughs including Kensington and Chelsea are particularly sought-after.
“Many first-time buyers are priced out and are looking in zones 3-6 for more affordable homes whilst others decide to continue to rent and save up a larger deposit.”
