THE locations where buying a home has become more affordable over the last year have been revealed.
If you’re a first-time buyer or looking to move up the property ladder, ever-rising house prices can feel daunting.
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But new data from Halifax has shown that house affordability is actually improving – with wages outpacing the inflation of properties across the UK.
This means that among buyers, generally, buying a home has become slightly more affordable relative to income.
The data reveals that the average house price to earnings ratio is currently at 6.55, which is down from 6.62 last year.
The average house price-to-earnings ratio has been steadily reducing since it reached a peak of 7.24 in the summer of 2022, Halifax said.
Where are the locations where home buying has become more affordable?
According to Halifax, eight out of the 12 UK regions were seeing more affordable conditions as of this year.
These regions were:
- Eastern England – down 0.12
- East Midlands – down 0.21
- North East – down 0.18
- Greater London – down 0.27
- Scotland – down 0.04
- South West – down 0.14
- Wales – down 0.18
- West Midlands – down 0.37
The data reveals that the West Midlands saw the biggest improvement to its affordability over the last year.
Meanwhile, these four regions became less affordable:
- Northern Ireland – up 0.21
- North West – up 0.09
- Yorkshire and Humber – up 0.01
- South East – up 0.01
Why are some UK locations becoming more affordable?
Overall, UK wages have improved by 5% over the last year, reaching an average of £44,667.
Meanwhile, house prices have increased by 3.8% to an average of £292,508.
The percentages reveal that, while both are increasing, wages are actually outpacing the inflation of house prices.
This trend is also represented by the decrease in mortgage costs as a percentage of income, which has fallen from 33% to 28% across the last year.
Amanda Bryden, Head of Halifax Mortgages, said: “Housing affordability has improved over the past year, thanks to stabilising property prices, strong wage growth, and easing interest rates.
“That’s great news for first-time buyers and existing homeowners looking to remortgage or move up the property ladder.
“However, while homes are becoming more affordable, the progress has been gradual.
“Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.”
Karen Noye, mortgage expert at Quilter, said that progress in affordability could be unsustainable in the long run.
She said: “Unfortunately, while affordability has improved slightly over the past year, this progress remains fragile.
“Wage growth, though outpacing house price inflation, may falter in the face of the government’s proposed budget changes, particularly around employer National Insurance Contributions (NICs), which could constrain businesses’ ability to deliver meaningful pay rises.”
Where are the most and least affordable places to live in the UK?
From the study, the North East was revealed to be the most affordable region, with a house price to earnings ratio of 4.38 – down from 4.56 last year.
This is because house prices in the North East rose by +2.4%, compared to a +7% increase in average income for the area.
The town which took the winning spot within this region was Kingston upon Hull in East Yorkshire, which was ranked most affordable town in the UK with a 3.15 house price to earnings ratio.
The second most affordable region was Northern Ireland at 5.09 – however this has increased rapidly since last year from just 4.88.
Meanwhile, the third most affordable was Yorkshire and Humber, which had stayed relatively the same level of affordability at 5.42.
In comparison, the South East of England was revealed to be the least affordable place to live in the UK.
With a ratio of 8.96 up from 8.95 last year, results showed the region is even less affordable than London.
While London still boasts the highest average house price of £539,238, it had a house price to earnings ratio of 8.22, placing it second.
Meanwhile, the third least affordable was Eastern England at 7.95.
However this region had an affordability index of 8.07 last year – showing that even some of the least affordable regions are looking up for home-buyers.
How to get the best deal on your mortgage
IF you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories