Posts tagged ‘affordability’
Bradford most affordable property market in UK
Our latest research shows UK housing affordability is at its highest level since 2003.
Affordability rates have improved substantially over the past couple of years as a result of lower mortgage rates and falling house prices that have now begun to stabilise. We are at levels of affordability not seen in the UK housing market for almost seven years which potentially makes it good time to buy, especially if current low interest rates can be locked into to account for any rate increases that may happen later this year.
Overview:
- UK housing market affordability reaches seven-year high
- 58% of homes now affordable up from just 34% three years ago
- Property prices now more affordable than at any time since in 2003
- Average UK income earner can afford to buy 58% of UK properties
- Bradford most affordable market in UK, London least affordable
- Over the past 10 years, affordability levels reached their highest point in 2002 at 66%
- The current levels were last seen in 2003 when the affordability rate was 56%
Key results:
- Bradford – four out of five homes (82%) are affordable
- Hull second most affordable with 81% of homes now deemed affordable
- Stoke-on-Trent (80%), Birmingham (78%) and Coventry (78%)
- London least affordable housing market – less than one-third (32%) of homes are affordable (11% in 2007)
- Southampton (44%), Bristol (53%), Norwich (58%) and Leicester (59%) were among the five least affordable markets in the UK
We calculate the affordability rate using median incomes and average house prices in each geographic area along with prevailing mortgage rates. It judges a home to be ‘affordable’ if one-third of the median income is sufficient to cover mortgage repayments. In 2002 using one-third of income to meet mortgage repayments allowed a purchase of £118,934 whereas today, given the current low financing costs and increased incomes, the same proportion of income finances a purchase of £188,423.
Housing market affordability rate in key UK markets
| City | Average Value March* (£) | March 2010** | 3 Years Ago** | 5 Years Ago** | 7 Years Ago** | 10 Years Ago** |
|---|---|---|---|---|---|---|
| Total UK | £211,056 | 58% | 34% | 39% | 56% | 65% |
| Bradford | £115,900 | 82% | 54% | 66% | 86% | 88% |
| Hull | £110,057 | 81% | 56% | 66% | 85% | 87% |
| Stoke-on-Trent | £117,620 | 80% | 52% | 59% | 81% | 83% |
| Birmingham | £146,003 | 78% | 43% | 47% | 71% | 81% |
| Coventry | £147,750 | 78% | 45% | 56% | 72% | 80% |
| Derby | £154,050 | 78% | 53% | 56% | 75% | 84% |
| Manchester | £137,180 | 77% | 45% | 56% | 79% | 83% |
| Liverpool | £138,995 | 75% | 43% | 50% | 77% | 82% |
| Sheffield | £151,661 | 73% | 44% | 50% | 73% | 80% |
| Nottingham | £147,390 | 72% | 43% | 45% | 64% | 76% |
| Leeds | £163,331 | 72% | 44% | 48% | 71% | 80% |
| Glasgow | £147,806 | 71% | 51% | 59% | 73% | 77% |
| Cardiff | £187,410 | 64% | 31% | 37% | 60% | 72% |
| Newcastle | £140,171 | 63% | 35% | 41% | 62% | 72% |
| Edinburgh | £221,824 | 60% | 41% | 45% | 63% | 69% |
| Leicester | £160,805 | 59% | 21% | 25% | 50% | 68% |
| Norwich | £186,347 | 58% | 18% | 25% | 47% | 66% |
| Bristol | £208,225 | 53% | 15% | 22% | 43% | 59% |
| Southampton | £209,333 | 44% | 15% | 17% | 34% | 52% |
| London | £420,237 | 32% | 11% | 17% | 29% | 37% |
*Source: Zoopla.co.uk
**Calculated by Zoopla.co.uk as the proportion of properties where a third of median income in the selected market would be sufficient to cover mortgage repayments, based on prevailing mortgage rates and a 75% LTV mortgage payable over 25 years.
In 2007, when house prices and mortgage rates peaked, affordability rates nationally fell to record lows of 34%, resulting in the subsequent correction over the past couple of years to the more sustainable level of 58% currently. Across the UK, affordability rates vary greatly by area with the most affordable markets generally in the north and the least affordable in the south, despite the higher income levels.
