FTB affordability eases despite house price rises
In its May affordability index, FindaProperty.com has reported that first-time buyer house prices have increased for the fourth consecutive month, taking the average asking price of a starter home to £155,677.
The figure is 1.2% higher than a year ago and at its highest since February 2009.
At the same time, affordability has improved for those getting a foot on the property ladder, despite the rise in asking prices and a fall in average first-time buyer income.
According to figures from the Council of Mortgage Lenders, the cost of the average entry level home is now almost 4.9 times gross household earnings, compared with 5.5 times at the end of 2008.
Consequently, the typical “affordability gap”, or effective deposit required, has eased to £56,449, or almost 1.8 times average household earnings, whereas at end December 2008 the gap was a staggering £70,000, or 2.4 times average first-time buyer income.
A different picture emerges for those with property ownership ambitions in London, where the current affordability gap soars to £153,364 or 4.7 times average first-time buyer income.