Property affordability at seven-year high

A combination of falling house prices and low interest rates means that UK housing is now more affordable than it has been at any time since 2003.

According to property website Zoopla, the average UK earner can now afford to purchase 58% of the homes in the UK, compared to the top of the market in 2007, when they could afford just 34% of properties.

Zoopla takes the median salary and average property price in each geographic area, and plots them against current mortgage rates.

It deems a property ‘affordable’ if a third of the income will cover mortgage repayments.

In 2002 one-third of median income would finance a mortgage big enough to buy a property worth £118,934, while today that figure has risen to £188,423.

But there are huge regional differences in affordability. Generally speaking, areas in the North are more affordable and in the South, less so.

Zoopla’s research revealed Bradford as being the most affordable city in the UK where four out of five homes (82%) are affordable for residents on the average local income. Hull was second, followed by Stoke-on-Trent (80%), Birmingham (78%) and Coventry (78%).

London is by far the least affordable, with less than one third (32%) of homes affordable for residents, although this is a far better picture than 2007 when just 11% of properties were deemed affordable. Southampton (44%), Bristol (53%), Norwich (58%) and Leicester (59%) were among the five least affordable places in the UK.

Nicholas Leeming, commercial director of Zoopla.co.uk, says:

“Affordability rates have improved substantially over the past couple of years as a result of lower mortgage rates and falling house prices that have now begun to stabilise.

“We are at levels of affordability not seen in the UK housing market for almost seven years which makes it a great time to buy, especially if current low interest rates can be locked in by the borrower.”