Where should you move? For most people the answer to this question is another question: where can I afford? This is pertinent in a market that is “more divided at a regional level than ever”, says Savills.
According to the estate agency, the average price of a house in London is £478,142, compared with the UK average of £209,971. Some areas in the northeast of England are down 9 per cent compared with prices pre-credit crunch.
Where you can afford is largely dictated by your stage of life. First-time buyers are unlikely to have as big a deposit as a family or a downsizer. Families may have to consider proximity to schools; if you are retiring, you may want something smaller, but near a decent hospital or family and friends.
We take a look at some of the most and least affordable places in the UK, depending on your demographic.
First-time buyers
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Most affordable
Southampton, Norwich and Nottingham top the list of affordable cities for first-time buyers, according to a study by Post Office Money, which looked at the 14 largest cities in England and Wales. The study interviewed more than 1,000 people and found that compromise was the key in house buying, with 70 per cent choosing to buy a home located an average of 26 minutes away from their first preference.
Their top motivation to buy was “having met a partner and wanting to build a home together”. Sadly, fewer than half said the buying experience was “exciting” or “joyful”. Their top tips for other first-time buyers included being flexible, thinking long term and seeing lots of properties in their price range.
Owen Woodley, the managing director of Post Office Money, says: “With average house price growth having increased by 48 per cent since 2005, compared with an increase to the average first-time buyer income of only 37 per cent over the same period, there is no question that the UK housing market remains a challenging environment.”
The study shows that Southampton has the most affordable homes, with an average price of £199,074, and 98 per cent of properties are deemed affordable by the surveyed group. In Norwich 93 per cent of properties are deemed affordable (despite prices there rising by 11 per cent in the past year, the average price is £196,987) and 89 per cent of properties in Nottingham (average price £128,192) are affordable.
Least affordable
Bristol has experienced the biggest shift in affordability, according to the survey. The number of properties affordable for the group surveyed shrank by 20 per cent in the past year. Only 29 per cent of homes in the city remain within the average first-time buyer’s budget. Average property prices in Bristol have increased by 14 per cent in the past year to £268,070, making it the second-least affordable city for first-time buyers. The least affordable, though, is Brighton, where only 2 per cent of properties are considered within a first-time buyer’s price range and the average property price is £352,303.
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The data suggests that first-time buyers have higher-than-average deposits because they cannot pass affordability tests to secure a loan with a high loan-to-value ratio. For example, in the London borough of Lambeth, which includes parts of chic locations such as West Dulwich and Clapham, about two thirds of first-time buyers have a deposit of more than 10 per cent.
Similarly, Brighton & Hove is unaffordable for many in terms of salary to house price ratio, but two thirds of first-time buyers there are putting down deposits of more than 10 per cent. This suggests that people moving to these places are older and/or have borrowed money from family, says Fionnuala Earley, the chief economist at Countrywide.
“Getting a mortgage is a big hurdle these days,” she says. “Despite low mortgage rates making borrowing affordable, buyers have to pass stringent affordability tests to get a loan. Ways to ease the burden are by putting down a bigger deposit and/or lengthening the mortgage term to keep costs down and make it easier to pass the test.”
Families
Figures compiled for The Times by Countrywide show that, although the average purchase price is highest for buyers in their forties and fifties (£335,514 to £388,492), the percentage of their salary spent on repayments has fallen, from 27 per cent in their twenties to 23 per cent in their fifties.
Data from Zoopla, the property website, shows that the most affordable locations (based on annual property value growth and salary growth) are Sunderland, Chelmsford and Plymouth. Surprisingly, Winchester, a London commuter hotspot, has sneaked into the most-affordable list, in tenth position. The average property price there has fallen by 0.2 per cent since June 2016, and the average salary has grown by 2.11 per cent in the same time period.
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However, Winchester has also slipped into the top five locations for highest property value-to-salary ratio, making it, on another metric, one of the most expensive places to live in Britain, along with London, Guildford, Oxford and Chichester. Despite the expense, agents say Winchester remains popular with London second-steppers.
Geoff Jones, an associate with Strutt & Parker’s Winchester office, says that prices for a family house start at about £700,000 near the city centre and train station. “Families come to Winchester because it is a fantastic springboard to the rest of the country, while still being close enough to London to maintain work and social links. We are just over an hour to Waterloo, which means you go from door to desk in less than an hour and a half.” A range of good private and state schools is another big draw.
Lawrence Hall, a spokesman for Zoopla, says: “Getting on the property ladder can be tough, especially if you’re looking to buy in an area where property prices are rising faster than salaries. If you can be flexible about where you buy, then look at the areas where salaries are rising faster than property prices, such as Chelmsford.”
A recent study by Lloyds Bank looking at house price to earning ratios across the UK found that Scottish cities are among the most affordable. Stirling is top of the list, with house prices only 3.7 times average annual earnings, compared with a national average of
7.1 times. Glasgow, Inverness and Dundee also feature in the top 20, alongside Belfast in Northern Ireland.
Downsizers
Downsizing is not only about releasing equity. You may be dependent on where your children or grandchildren live, you may like to spend your retirement walking in the Lake District, or playing golf in Scotland.
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Data from Willerby, the largest manufacturer of holiday homes in the UK, reveals the best and worst places for retirees to buy. The group analysed data from the Office for National Statistics, comparing variables such as life expectancy, average house prices, happiness score, hospital ratings and crime, across England. Staffordshire comes out top, with an average house price of £178,179. Life expectancy there is just under 85 years (one of the highest) and the crime rate is low. Surprisingly for some wedded to the idea of a retirement in the south, next on the list is Tyne and Wear, with an average house price of £133,916 and a life expectancy of 83.5 years. The hospitals there are rated outstanding, compared with “good” in Staffordshire. It is followed by Shropshire, Suffolk and Somerset.
Bottom of the league are Buckinghamshire, Bedfordshire and London, in part because of their high average house prices. Buckinghamshire has “oustanding” hospitals, but a low proportion of people aged over 65, suggesting that the key to pensioners’ happiness could be having other retirees to spend time with. It also has a higher crime rate than many places. The study says that Greater London hospitals need improvement, and the area has a low number of residents aged over 65. Cheeringly, all 48 counties have average happiness scores of seven or eight out of ten, suggesting that most retirees are happy wherever they live.