New research indicates that the gap between house prices and earnings in the UK is narrowing, with the house price-to-income ratio falling to 7.3, its lowest level in 11 years. This improvement comes despite a rise in monthly mortgage costs.
Data from the Lloyds affordability review shows that average monthly mortgage repayments have increased by £57 over the past year, from £1,100 to £1,157, due to higher interest rates. Saving for a deposit also remains a significant challenge for many prospective buyers.
The average UK house price saw a 0.5% increase over the last year, reaching £299,131, while average earnings grew by 4.5% to £40,790. The gap between the most and least affordable housing markets in Britain has slightly narrowed, with the largest improvements generally seen in regions where house prices were previously highest relative to earnings.
The South East recorded the biggest improvement, with its average home now costing 9.1 times annual earnings, down from 9.7 a year ago. Greater London's ratio fell from 10.9 to 10.3. Despite these changes, London and the South East continue to be the two least affordable regions.
For first-time buyers, the typical property price rose by 0.3% to £239,681, and the house price-to-earnings ratio for a first home decreased from 6.1 to 5.9, the lowest since 2015. However, a typical first-time buyer still needs to save almost £24,000 for a 10% deposit.