More than half of two and three-bedroom houses are now within reach of households on an average income, but mortgage rates above 5% are preventing improved price affordability from translating into stronger buyer activity.

Zoopla analysis found 51% of two and three-bedroom houses for sale across Britain were affordable to a household earning £53,500, up from 45% in 2025.

Based on borrowing 4.5 times gross annual income and providing a 20% deposit, Zoopla calculated that such a household could afford a property listed at up to £301,000.

However, average mortgage rates have risen above 5%, having started the year at around 4%, while sales agreed are running 9% below their level a year ago.

AFFORDABILITY DIVIDE

The figures highlight the difference between affordability measured against house prices and the actual monthly mortgage costs facing borrowers.

Improvement has been particularly marked in southern and eastern England, where income growth, greater housing supply and flat or falling property prices have brought more homes within reach.

The proportion of affordable two and three-bedroom houses in the South West has risen 9.8 percentage points to 47%, while the East of England has increased 9.2 percentage points to 39%. But significant regional differences remain.

Some 83% of qualifying houses in the North East are affordable under Zoopla’s measure, followed by Scotland at 80% and Yorkshire and the Humber at 76%.

That compares with 23% in the South East and just 0.5% in London.

MORTGAGE COSTS

Richard Donnell (pictured), executive director at Zoopla, said: “The number of two and three-bedroom houses within reach of households on an average income has increased as incomes continue to rise faster than house prices.

“However, the impact is being offset by higher mortgage rates which are adding to the monthly costs of taking out a new mortgage.”

Donnell said higher property values meant the additional borrowing costs were having a greater impact on buyers in southern regions.

He added: “We expect house prices to continue to rise more slowly than incomes which will continue to help improve the affordability of housing.

“A greater choice of homes for sale is supporting a buyers market and means that sellers are having to be more realistic on price. Anyone considering a move should take a fresh look at what they can afford and what’s available locally.

“Waiting for mortgage rates to fall further may not necessarily put them in a better position to buy.”