Residential property in the UK became less affordable last year, says Hamptons

on Apr 20, 2015

According to the quarterly ability-to-buy index from estate agent Hamptons International, buying a residential property in the UK became harder last year, with soaring house prices and the cost of utilities overwhelming the average income.

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The ability-to-buy index is based on a buyer having a 15 percent deposit and also takes into account income tax and spending on essentials such as food, utilities and council tax. The index fell by an average of three percent last year when compared with figures from 2013.
London has seen the largest decrease in the affordability of residential property of all regions in the UK in the 12 months to the last quarter of 2014. It became 73 percent harder to buy a house in the capital following a 17 percent increase in residential property prices and nine percent increase in childcare costs across the city. This, combined with a 1.6 percent decline in the average income, saw affordability to buy in London decline by a total of 77 percent since the last general election in 2010. An average young family in London now has a total of £347 left a year after mortgage payments and essential spending.
However, UK-wide, owning a home was still more affordable on average last year compared to before the last election, with the Hamptons index increasing by two percent over the past five years. Following the introduction of several schemes to help first-time buyers onto the property ladder since 2010, there has been an affordability improvement of 11 percent.
Ability to buy across the UK property market during the course of David Cameron’s rule has improved in most regions, with the South West of England experiencing a nine percent increase. This part of the country also experienced a 4.5 percent income increase and a more modest 5.5 percent increase in house prices.
The ability to buy also differed between household types, with a one percent decline over the 12 months to Q4 last year recorded for working, childless couples. However, it was three percent easier than at the time of the last election. Meanwhile, it has become six percent harder for a working family with two children to afford to buy a new home.
Fionnuala Earley, analyst at Hamptons International commented:
“For working families with children, the growing cost of childcare eats into the amount of money left at the end of the month to service a mortgage. The ability to buy a home today is on average 2pc better than it was at the time of the last general election, but despite some of the lowest mortgage rates on record, falling food and oil prices and some increase in wages, ability to buy is worse off than this time last year.”


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