“Home ownership is now almost completely out of reach for most people on average or low incomes – with house prices continuing to soar, most people can’t scrape together a sky-high deposit to buy and so are stuck paying extortionate private rents,” Polly Neate, the chief executive of Shelter, said. “The government has ploughed money into a series of expensive home ownership schemes that most people can never hope to benefit from, as they still require a sizeable deposit when most renters don’t have any savings.”
Mortgage affordability is that the amount required from a lender – the property price minus a 10% deposit – should not exceed 4.5 times the buyer’s wage or the combined wage of a couple.
That target is unachievable for Single first-time buyers – who are typically aged 32 – in 95% of local authorities in England, based on the median earnings for people in their 30s.
Single first-time buyers in Wales would not be able to afford a home in 86% of local authorities in the country.
House prices increased by the largest proportion in Salford, in the north-west of England, where the average house price for a first-time buyer increased by 58% over the six-year period. This is despite the fact that Salford is within the top 20 most deprived local authorities in England in terms of deprivation.
In 2015, a single first-time buyer would have needed 4.4 times an individual’s wage to afford a typical mortgage, within the affordability criteria generally sought by lenders. Today, a buyer on the median wage for a person in their 30s in the region would require 6.4 times the average salary.
Dan Wilson Craw, the deputy director of the campaign group Generation Rent, said: “It is already a struggle to save the deposit to buy your first home, and as prices have shot up home ownership has become even harder … The government has intervened to encourage banks to lend at higher loan-to-value ratios, so buyers don’t need as much in savings. But ultimately if you’re borrowing that much, your monthly repayments will be huge.”