New Skipton report reveals the full-scale of the affordability challenge facing renters and first-time buyers
Only one in eight potential first-time buyers can afford the average first-time buyer house in their area based on their financial situation, according to the inaugural Skipton Group Home Affordability Index.
For first-time buyer households earning £22,850 annually or less, fewer than one in 100 can afford to take the first step onto the property ladder in their local area. Even among those earning over £71,250 per year, only 44% can afford to buy their first home in their local area.
The findings also reveal that almost 80% of potential first-time buyers lack sufficient savings for a deposit. Nearly four in 10 renters spend 45% or more of their income on essential housing costs, hindering their ability to save for a deposit.
The West Midlands, London, and Wales are the worst areas for first-time buyers due to low deposit levels, high house prices, and lower incomes, respectively. In contrast, first-time buyers have better prospects in Scotland and the East of England due to lower house prices and higher income-to-house price ratios.
Despite some improvement during the pandemic, overall housing affordability has declined due to the cost-of-living crisis and remains at 2020 levels, with limited signs of improvement.
“Having somewhere to call home is one of the most important issues facing millions of people across the country,” said Stuart Haire (pictured), chief executive of Skipton Group. “Our findings paint a bleak picture for first-time buyers, with high housing costs, insufficient savings, and regional disparities underscoring the need for collaborative and targeted interventions to support aspiring homeowners.
“We call on the government to work across departments and sectors to address this issue. We are ready to be part of those efforts.”
The Skipton Group Home Affordability Index, launched today, highlights the difficulties of securing a home in Great Britain. The new metric combines data on the affordability of purchasing and running a property, offering a crucial perspective on accessing the housing market.
Created in partnership with Oxford Economics, the index uses data from Skipton Group businesses, the Office for National Statistics, the Bank of England, and other sources to provide insight into the affordability challenges faced by renters, first-time buyers, and homeowners by age, income, geography, and family type.
“The Skipton Group Home Affordability Index provides a comprehensive picture of housing affordability,” said Alex Stewart, associate director at Oxford Economics. “Economic shocks over the last four years have caused fluctuations in the index, but housing affordability today is broadly unchanged compared to the start of this decade. Skipton’s interactive tool allows first-time buyers and homeowners to explore affordability in their area.”
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