New official figures reveal how much more first time buyers face paying for a home in London than anywhere else in England and Wales and how affordability has changed
Prospective first time buyers in London in 2017 could expect to spend 13 times their earnings on property, compared with 5.5 times in the North East, according to the data from the Office for National Statistics (ONS).
London has been the least affordable region for prospective first time buyers in 14 of the last 19 years, with the North East the most affordable for 18 of the last 19 years and housing has become less affordable for those who bought their first house in 78% of local authorities in 2017 compared with the previous year.
The calculations based on home prices and average annual earnings give an affordability ratio. A lower affordability ratio are more affordable for prospective first time buyers, while higher affordability ratios indicate less affordable regions.
The South West, the East, the South East and London had a higher prospective first time buyer affordability ratio than the rest of the English regions and Wales in 2017. Wales is the third most affordable for prospective first time buyers with a prospective affordability ratio of 6.5.
Amongst English regions, there is a noticeable geographical divide, with regions in the North and the Midlands ranging from 5.5 in the North East to 8.0 in the East Midlands and those in the South ranging from 10.1 in the South West to 13 in London.
The figures also show that since 1999, the prospective first time buyer affordability ratio in London has increased by 235% from 3.89 to 13.03 last year, while in the North East the ratio has increased by 122% from 2.46 to 5.46 last year. The larger increases for affordability ratios in London were driven by increases between 2013 and 2017, while the North East had relatively smaller increases.
In 2017, those who became first time buyers in England and Wales spent on average 4.3 times their gross annual income purchasing a property with a mortgage, up from 4.2 in 2016
Local authorities in London, the South East and parts of the East of England had the highest first time buyer purchase affordability ratios. There were 12 local authorities in which first time buyers spent more than six times their income on buying a property with a mortgage, all of which were in London.
Between 2016 and 2017, the largest proportional increase in first time buyer purchase affordability ratios occurred in Conwy, Wales, at 15%, while the second- increase was in Camden, London, at 14%.
First time buyer purchase affordability ratios decreased substantially in City of London between 2016 and 2017, with a decrease of 43%, although the report points out that due to the high price of property there are unlikely to be many mortgages to first time buyers in this location.
In general, prospective first time buyer affordability ratios increased more than first time buyer purchase affordability ratios in English regions between 2013 and 2017. Increases in prospective first-time buyer affordability ratios were much higher than the increases in first time buyer purchase affordability ratios in the least affordable regions of London, the East, and the South East.
The only areas where changes in prospective first time buyer affordability ratios were less than the changes in first time buyer purchase affordability ratios were the North East and Wales, where prospective first time buyer affordability ratios decreased between 2013 and 2017.
