More family homes become affordable for average-income earners, Zoopla finds

Zoopla said this was up six percentage points from last year, meaning a household on an average combined income of £53,500 can now afford a home listed up to £301,000, based on 4.5 times borrowing and a 20% deposit.

Although family homes have become more attainable, Zoopla said higher mortgage rates had made potential movers more cautious. 

With average mortgage rates now above 5%, up from around 4% at the start of the year, sales agreed have dropped 9% year-on-year, pointing to declining buyer confidence. 

Affordability improves in the South 

Zoopla said the biggest improvement in the affordability of family homes was in Southern and Eastern regions, where income growth, more homes listed for sale, and flat or falling house prices put properties within reach of buyers. 

Sponsored

Your First Home: confidence to build

Sponsored by Halifax Intermediaries

The most improvement was seen in the South West, where there was a 10-percentage-point rise in the share of family homes becoming affordable, accounting for 47% of properties listed for sale. This was followed by the East of England, which improved by nine percentage points. 

Northern regions, where homes were already relatively affordable, recorded smaller improvements. 

Although the ability to buy a home had got better in Southern regions, affordability was still a constraint for buyers. In the South East, just 23% of two- and three-bed houses were within the affordability threshold, due to average asking prices of £375,000. 

London was the least affordable market, with fewer than 100 family homes listed below £301,000. 

The North East was the most affordable region, with 83% of two- and three-bed houses listed for sale at less than £301,000. These houses were listed at an average of £155,000, around half the affordability threshold. 

In Scotland, 80% of family homes were below the affordability threshold, while the share was 76% in Yorkshire and the Humber. 

Richard Donnell, executive director at Zoopla, said: “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.

“The extra cost for buyers is greater in Southern regions, where house prices are higher, and this affordability divide is seen across the country. More than two-thirds of houses in Northern England and Scotland are now affordable to the average household, while this drops to less than a fifth in London and South East England. 

“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 buyer’s market and means that sellers are having to be more realistic on price. Anyone considering a move should take a fresh look at what they can afford and what’s available locally. Waiting for mortgage rates to fall further may not necessarily put them in a better position to buy.”