Whilst the average price of a first home has increased by 63% over the last decade, first-time buyer affordability is at its best level in 10 years, driven by strong growth in the average annual earnings in recent years.
Estate agency Yopa analysed both the average first-time buyer house price and the average annual earnings over the last decade, to calculate first-time buyer house price affordability in each year, based on the average income to house price ratio seen in each year.
The research shows that, with the average annual income in 2024 sitting at £31,717 and the average price of a first home coming in at £226,744, the house price to income affordability ratio for the nation’s first-time buyers was 7.1, meaning they required 7.1 years of income to cover the average value of a first home.
This current affordability ratio is the best it’s been in the last 10 years, equaling the 7.1 seen at the start of the decade in 2015.
This is despite the fact that the average price of a first home has increased by 63% since then, whilst the average income has climbed by just 44%.
Since 2015, the average first-time buyer affordability ratio has largely increased, hitting a decade high peak of 8.0 in 2021 and 2022, before falling to 7.3 in 2023 and then to the 7.1 seen over 2024.
The reason for this reduction has been a stronger rate of growth seen with respect to earnings in recent years, with the average annual income climbing by 6.2% in 2023 and 7% in 2024, versus a decline of -2.7% seen in the average first-time buyer house price in 2023 and a slower rate of growth of just 4.7% in 2024.
London remains the least affordable market, where the average first-time buyer needs 12.4 times the average annual regional income to cover the value of a first home, with buyers in the South East (8.9), the East of England (8.5) and South West (8.4) also needing more than eight times the respective regional income.
In contrast, Scotland is the most affordable area of the market, where the average first-time buyer house price sits at just 4.8 times the average annual regional earnings.
CEO of Yopa, Verona Frankish, commented: “It’s fair to say that getting that first foot on the ladder has been no easy task at any point over the last decade and, now that the Help to Buy scheme has ended, it’s perhaps tougher than ever in some respects.
"However, the silver lining for today’s first-time buyers is that whilst the average price of a first home has increased substantially over the last 10 years, earnings growth has also improved considerably in the last three to four years.
"As a result, the current first-time buyer affordability ratio is at its lowest since 2015, although as always, the task of getting onto the property ladder is far harder in some regions versus others.”
