House-hunters prepared to pay increasing multiples of income to secure their desired home; from 4.1x in January to 4.6x last month.
Buyers in London & South East stretch themselves to 5.2x incomes, far further than the rest.
Lowest income households pay the highest multiples, but other factors are at play.
Confidence in rising prices is higher than March and househunters’ expectations of price increases for the next 12 months have risen too.
The North/South divide remains, with Scotland and Northern regions of England far more bullish than their Southern counterparts.
Londoners’ have sharply higher expectations for house prices in the capital than in March.
Jim Buckle, Managing Director of assertahome.com comments: ‘Faced with the reality of rapidly rising house prices so far this year, househunters are digging deeper to fund their purchases. Respondents to our January survey were over-optimistic about what their money could buy and as the peak spring house-buying season approached, realised that they had to stretch their budgets further.’
Lower income households are stretching the furthest, prepared to pay up to 6.9x income while those at the top of the earnings scale are only looking to spend 3x income. The richest households have also seen the lowest expansion in the multiples of income they are paying.
Jim Buckle comments further: ‘Higher income households have benefited this year from two trends. First, high value house prices have risen more slowly than the average house and secondly, the revival in the financial services industry has meant higher bonuses for top earners meaning they are stretching their incomes less.’
‘At the lower end, other factors are at play. Many of these househunters are retired couples trading down who have substantial equity in their existing homes to fund a purchase, or younger househunters receiving help from their parents to get on the property ladder.’
In London and the South East househunters must pay an average of 5.2x their income compared to 4.0x in the rest of the UK. Although respondents’ incomes in the region are 22% higher than the rest of the country, on average those in London and the home counties are looking for property 58% more expensive than those elsewhere. Those at the bottom of the income scale are stretched the furthest, while disproportionately higher income multiples being paid at the top end reflect appetite for very high-end property.
Meanwhile, confidence in the UK housing market remains high and has picked up since March. Not only has the overall balance of respondents expecting prices to rise over the next twelve months grown to 84%, but the average forecast has risen too. Househunters expect prices to rise 6.6% over the next twelve months, shrugging off doom-mongers’ predictions of an imminent crash in prices.
The North/South divide remains marked. The most optimistic regions are the North, Yorkshire & Humberside and Scotland; in each case more than 90% of respondents expect house prices to rise in the next twelve months, far more than their southern counterparts. These northern regions also expect much faster house price growth in their part of the country, an average of 9.5% compared to less than 5% in the South East and South West.
London has seen the most notable change this month with respondents much more bullish on the outlook for their region. Londoners now expect house prices to rise 6.6% over the next twelve months, almost 50% faster than their March forecast of 4.5%.
Jim Buckle adds: ‘Regional disparities in confidence are stark. Those regions which have seen the strongest market of late remain the most bullish on the outlook. The South remains subdued, but London has perked up markedly as higher City bonuses have lifted the spirits of the capital’s house-hunters.’
