More than half of Britain's two and three-bedroom houses are now within the budget of an average-income household, according to new research from Zoopla. This marks an increase to 51% from 45% a year ago. A household earning a combined £53,500 can now afford a property priced up to £301,000, assuming a mortgage of 4.5 times annual income and a 20% deposit.
Despite this improvement in affordability, higher mortgage rates are reportedly holding back buyers. Average mortgage rates have climbed above 5%, having started the year at approximately 4%. Consequently, sales agreed are running 9% below last year's figures.
Southern England has seen the most significant affordability gains, with the South West recording a 9.8 percentage point increase to 47% of affordable two and three-bedroom houses. The East of England saw a 9.2 percentage point rise to 39%, while the South East improved from 16% to 23%, though it remains among the least affordable regions.
London continues to be the most challenging market, with fewer than 100 two and three-bedroom houses listed below the £301,000 threshold, representing just 0.5% of available properties in this category. In contrast, the North East remains the most affordable region, with 83% of two and three-bedroom houses priced within reach of an average-income household.