What are the most and least affordable locations for first-time buyers?

With the recent launch of the government First Homes program – designed to help first-time buyers in England access the property ladder – recently released data has revealed the most and least affordable locations for those taking their first step on the property market. real estate scale.

Under the new scheme, First Home properties will receive a discount of at least 30% of the original market value to enable more affordable deposits and mortgages with prices capped at a maximum of £ 250,000 ( £ 420,000 in Greater London). However, it is important to note that this discount will apply to the life of the property, which means that the same percentage of the discount will apply when the home is resold in the future.

Online mortgage broker Mojo Mortgages analyzed various factors affecting housing affordability in June 2021, including house prices, mortgage repayments, average annual salary and take-home monthly salary to determine where in England was the most. and the least affordable.

Based on the average monthly mortgage payment as a percentage of income, Oxford was the least affordable place in England for first-time buyers, with the average monthly mortgage payment accounting for 49.37% of a couple’s take-home pay. This is based on an average property price in the city of £ 540,005 and an average annual salary of £ 31,232.

Bath (47.65%) and London (47.12%) followed closely, highlighting the difficulty of gaining access to the real estate scale in these areas. However, it is clear that there were gaps between the 32 London boroughs of the capital.

The ten least affordable areas in England based on mortgage as a percentage of income were:

Oxford (49.37%)
Bath (47.65%)
London (47.12%)
Reading (38.98%)
Poole (38.72%)
Cambridge (38.49%)
Brighton (37.19%)
Mud (36.68%)
Cheltenham (36.38%)
Exeter (35.03%)

On the other hand, Bradford was the most affordable for first-time buyers.

With an average house price of £ 145,981 and an average annual salary of £ 28,790, this was equivalent to 14.30% in terms of monthly mortgage payments as a percentage of income – the lowest in England.

Blackpool (15.94%) and Stoke-on-Trent (17.35%) followed next with the ten most affordable areas for first-time buyers as follows:

Bradford (14.30%)
Blackpool (15.94%)
Stoke-on-Trent (17.35%)
Sunderland (17.56%)
Middlesbrough (17.70%)
Hull (17.72%)
Carlisle (17.82%)
Durham (18.10%)
Liverpool (18.56%)
Bolton (19.19%)

Regardless of the location, the First Homes program could make a significant difference in a first-time buyer’s monthly expenses once on the real estate ladder in terms of mortgage payments and savings for that very large deposit.

For example, for those in London who buy a property under the scheme, they can expect to pay on average around £ 766 less per month on their mortgage payments, bringing their income expenditure percentage up to 42. 17% to 32.97% – a significant saving.

Nisha Vaidya, mortgage expert at money.co.uk, gives this advice: “A home is one of the most important purchases you will make and it can be difficult to figure out how much you can afford. Many factors, like your salary, regular expenses, and a debt-to-income ratio, will impact whether a home is within your reach.

“A good rule of thumb is to use no more than 35% of your gross income towards your monthly mortgage payments. Any more than that and you could become “poor at home” where you own a house but run out of money to do other important things like save money or go on vacation. “

Cassie Stephenson, Director of Mortgages at Mojo Mortgages, adds: “Of course, it’s important to remember that the 30% + discount will apply throughout the life of the property and will apply when you finally sell a First Homes program property for the first time. always worth considering regardless of location as an option for first-time buyers looking to scale property up.

“The savings available – including allowing first-time buyers to access higher LTV mortgages through reduced deposits – could also mean better access to lower interest rates and better overall savings throughout the year. over the life of a mortgage. Plus, of course, buying a home is an important long-term investment in your financial future, rather than lining the pockets of a homeowner.

“We are delighted to see how this new program will develop over the next few months as new properties and developments continue to emerge across England.”