The crash in UK house prices means properties are in theory now three times more affordable for first-time buyers (FTBs) than in 2007. The house price-to-earnings ratio is at its lowest level in more than six years.
The proportion of UK local authorities with affordable housing for FTBs on average earnings has more than trebled from 6 per cent in the third quarter of 2007 to 21 per cent in the first three months of 2009, according to the latest Halifax FTB Affordability Review.
Despite the increased affordability, FTBs are still struggling to wade through tight lending criteria and tight restrictions on high loan-to-value ratios. Figures from the Council of Mortgage Lenders (CML) reveal that the number of FTBs in February 2009 has dropped by 46 per cent since February 2008. "Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability," says Martin Ellis, housing economist at Halifax.
The report, which aims to give an overview of affordability across the UK, says that while Scotland and Yorkshire and the Humber estuary are the most affordable areas for FTBs, the average property bought by an FTB remains unaffordable for an average earner in all of the local authorities surveyed in London, South West, East of England and Northern Ireland.