Only 12.1% of potential first-time buyers can afford the average starter home in their local area, according to Skipton Building Society.

Headline measures of housing affordability have improved as wage growth outpaces house prices, but Skipton says deposit requirements and the cost of renting continue to restrict access to home ownership.

The warning follows analysis from Lloyds showing that the average UK home costs 7.3 times average earnings, down from 7.6 times and the lowest multiple for 11 years.

Skipton Group’s latest Home Affordability Index suggests the improvement in the house price-to-income ratio has yet to translate into substantially easier conditions for aspiring homeowners.

DEPOSIT PRESSURES REMAIN

More than 40% of potential first-time buyers are spending over 45% of their income on essential housing costs, according to Skipton, limiting the amount they can put aside towards a deposit.

Charlotte Harrison (pictured), chief executive officer of Homes at Skipton Building Society, said: “It’s encouraging to see the gap between house prices and earnings continuing to narrow, with wage growth helping to improve affordability on some measures.

“However, affordability remains a significant challenge for many aspiring homeowners. House price-to-income ratios are only one part of the picture.

“For many would-be first-time buyers, the biggest challenge remains raising a deposit while managing the cost of renting and everyday living expenses.”

The figures underline the difference between headline measures of affordability, which compare property values with earnings, and the financial position facing households attempting to save while paying rent and other essential costs.

CALL FOR WIDER SUPPORT

Harrison said: “The direction of travel is positive, but there is still more to do.

“Continued innovation from lenders, supportive policy and increased housing supply will all have an important role to play in helping more people achieve sustainable home ownership.”