Homeownership is increasingly out of reach for first-time buyers, according to the latest ONS Housing Affordability Report for 2023.
The report, published today, highlighted that the average annual disposable household income was £35,000 in England for the financial year ending (FYE) 2023, while the average house price stood at £298,000, resulting in a ratio of 8.6 years of income.
In comparison, the average house price to disposable household income ratios were 5.8 in Wales, 5.6 in Scotland, and 5.0 in Northern Ireland during the same period.
Since the series began, house prices in England have increased at double the rate of household incomes.
Although house prices in Wales and Scotland have also risen quickly, the disparities are less pronounced.
For low-income households, average-priced homes across all four nations have remained unaffordable, costing more than five years of income throughout the series.
Only the top 10% of income households in England could afford an average-priced home with fewer than five years of household income in FYE 2023; this was the top 30% in Wales, 40% in Scotland, and an average-priced home was affordable for average-income households in Northern Ireland.
In London, average homes were unaffordable for all income deciles, and the average home in three other regions was only affordable to the top decile.
Mark Eaton, COO of April Mortgages, said: “The widening gap between house prices and household incomes paints a worrying picture for those looking to get on the property ladder.
“Homeownership is becoming increasingly out-of-reach for first-time buyers in particular, especially those on lower incomes and in the South of England.
“Mortgage providers need to adapt to these affordability challenges.
“We have seen unprecedented challenges for homeowners in recent years with mortgage repayments shifting upwards as a result of rising interest rates.
Eaton added: “The Bank of England is estimating this trend could get worse, with 4.4 million borrowers seeing their mortgage payments increase over the next three years.
“Long-term fixes can offer a financial security blanket in these circumstances and could also mean that you are able to borrow more in the first place – particularly useful if you are looking at properties above the UK average.
“The demand for good-quality housing is robust in this country, with millions of people hoping to escape the costly rental market.
He said: “The main stumbling block highlighted in this report is the ability to save for a deposit.
“The Government should be working with mortgage providers and developers to help enable more first-time buyers to purchase their ideal home with smaller deposits.
“We encourage all potential buyers to consult with a professional mortgage advisor to assess the options open to them.
“Mortgages offered by the largest banks in the UK are often not the right plan and do not align with the affordability of the borrower or offer a comfortable level of risk.”
