Data from Twenty7tec has revealed that while salaries are up, the level of deposit being put forward by buyers has reduced.
By analysing the data from 2024, 2023 and 2020, Twenty7tec found that house prices for all property types apart from bungalows have risen.
The average price of a flat in 2024 rose to £288,931, marking an increase of £12,159 (or 4.39%) from the 2023 price of £276,772.
Houses reached £358,688 in 2024 – a rise of £14,558 (or 4.23%) from £344,130 in 2023.
Similarly, maisonette prices climbed to £303,205 in 2024, an increase of £11,203 (or 3.84%) compared to the 2023 price of £292,002.
Yet despite combined salary averages being at £77,028 across all mortgage searches in 2024, up 9.52% on the prior year, the deposits people are using to secure their homes have dropped.
For bungalows, deposits were equivalent to 1.5340 times combined income in 2024, compared to 1.7312 times in 2023 and 1.8891 times in 2020.
Deposits for flats dropped to 0.9984 times income in 2024, down from 1.0617 times in 2023 and 1.4456 times in 2020.
For houses, deposits fell to 1.2405 times income in 2024, compared to 1.3134 times in 2023 and 1.4263 times in 2020.
Similarly, deposits for maisonettes declined to 1.0221 times income in 2024, down from 1.1066 times in 2023 and 1.1891 times in 2020.
Nathan Reilly, director at Twenty7tec, said: “The current economic climate is making it increasingly difficult for people to afford larger deposits when buying a home.
“While house prices have risen and salaries have broadly kept pace with house price inflation, many prospective buyers are struggling to translate those salary gains into significant deposits.
“This shift reflects the affordability pressures faced by homebuyers and first time buyers, with borrowing multiples increasing and more of an onus on lenders to consider higher loan to value mortgages.”
He added: “As we move through 2025 and beyond, it will be crucial to see how lenders adapt their products to meet the challenges posed by this change in customer circumstances.
“For advisers, staying informed about the latest products and offers will be vital to ensuring they provide the best possible value and guidance to their clients in these uncertain times.”
