Skipton Group has launched its Home Affordability Index today.
It combines data on the affordability of purchasing a property, with the affordability of running on into a single metric.
The group says the index highlights the stark reality of securing a home in Great Britain today.
The index, created in partnership with Oxford Economics, utilises data from across Skipton Group businesses, the Office for National Statistics, the Bank of England and third-party external sources, to provide fresh insight on the affordability challenges faced by renters, first-time buyers and homeowners by age, income, geography and family-type.
The inaugural report show that just one in eight potential first-time buyers can purchase the average first-time buyer house in their area, based on their own financial situation.
For first-time buyer households earning £22,850/yr or less, fewer than one in 100 can afford to take the first step onto the property ladder in their local area.
Meanwhile, even among those earning over £71,250/yr, only 44% can afford to buy their first home in their local area.
The index also shows that almost 80% of potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area.
In addition, nearly four in 10 renters spend 45% or more of their income on essential housing costs, compounding their inability to save for a deposit.
Skipton Group said that first-time buyers’ affordability levels are worst in the West Midlands (driven by a combination of low deposit levels and moderate house prices), London (due predominantly to the high levels of house prices) and Wales (where lower income levels reduce households’ buying potential).
In contrast, first-time buyers face the best prospects in Scotland (driven by lower house prices) and the East of England (due to above-average income to house price ratios).
Despite improving during the pandemic, overall housing affordability has fallen over the course of the cost-of-living crisis and despite its recent recovery sits almost exactly where it was at the beginning of 2020, with limited signs of improvement on the horizon.
Stuart Haire, Skipton Group CEO, said: “Being able to have somewhere to call home is widely recognised as one of the most important issues facing millions of people up and down the country. But to fully understand the problem, we felt we needed to move beyond the examination of house prices, income, and rent to a deeper understanding of what is driving overall housing affordability. That’s why we created the Home Affordability Index.
“For some, our findings paint a bleak picture, notably for first-time buyers. The combination of high housing costs, insufficient savings, and significant regional disparities underscores the urgent need for collaborative and targeted interventions to support aspiring homeowners.
“The scale of challenge of housing affordability is so great that no one person can lead that charge, so we are calling on the government to work cross department, cross Whitehall, cross sector and cross industry, so that together we can really start to solve an issue that impacts so many people. We stand ready to be part of those efforts”.
Alex Stewart, associate director, Oxford Economics, added: “The Skipton Group Home Affordability Index highlights the challenges faced by households across Great Britain. It combines data on the affordability of purchasing and running a property to provide a comprehensive picture of housing affordability.
“The economic shocks of the last four years have led to fluctuations in the Index, but our analysis shows that housing affordability today is broadly unchanged compared to the start of this decade.
“For those who want to explore affordability in their area, Skipton’s interactive tool brings the challenge to life, allowing first-time buyers and existing homeowners the chance to see where they might be able to afford.”
