The Daily Telegraph - Saturday - Money
The cities where your money goes further
Despite soaring prices, many English locations still offer buyers that crucial combination of good quality of life and affordable property. Rachel Mortimer goes hunting
House prices are still breaking records two years on from the start of the pandemic- driven property boom. The average asking price climbed by 10pc to £ 375,501 in May, according to property website Rightmove, despite predictions that inflation and rising interest rates would curb buyers’ appetite.
Asking prices are now £ 55,000 higher than when the pandemic began, compared with a £6,000 rise in the two years before 2020. While house price growth is expected to slow, or even go into reverse, later this year, the damage has already been done for first-time buyers and affordability is at a record low.
Getting on the property ladder is not impossible, however. Lenders are competing hard and mortgage rates for younger borrowers have not suffered the same sharp rise seen elsewhere in the market. First-time buyers are also spared stamp duty up to a property value of £300,000, with a discount on properties worth up to £500,000.
According to Lawrence Bowles of estate agency Savills this should give them an edge as competition cools. “The stamp duty relief is the biggest advantage first- time buyers have against the wider market and it is a double advantage against landlords, who need to pay a 3 percentage point tax surcharge,” he said.
Savills analysed where first- time buyers had the best chance of buying in towns and cities across England. The firm examined locations in the top half of its “deprivation index”, which ranks areas by factors such as life expectancy and employment; a high score in the index signifies less deprivation.
THE NORTH
The city of Hull is the most affordable location in the top half of Savills’ index. The average property here costs 4.8 times local average full-time earnings, compared with the national average ratio of 6.8. The average home costs £ 93,470 and the city has an employment rate of almost 61pc.
In the North West, the most affordable town for first-time buyers is Wigan in Greater Manchester, where the average home costs £118,085. Buyers here need 5.1 times their salary to purchase, compared with 5.8 for the wider region.
Joel Edgerton of Regan & Hallworth estate agents said demand from firsttime buyers moving from outside the area had surged since the pandemic.
“We are seeing at least three times as many first-time buyers now moving to Wigan from outside the area,” he said. “Whereas before the pandemic if we put a suitable property on the market it might get one or two interested firsttime buyers from further away, now it’s more like four or five.”
Rising house prices have pushed the likes of Manchester and Warrington out of budget and many buyers have given up the search in these cities. “Wigan offers affordability you can’t get in surrounding areas, while you are still able to commute into the main cities,” Mr Edgerton said.
THE MIDLANDS Stoke-on-Trent is the most affordable urban spot in the West Midlands for first-time buyers, who need 4.9 times their salary to meet the area’s average property price of £94,646.
Famed for its pottery, the Staffordshire city is a 40-minute drive from the Peak District and equidistant between the bigger cities of Sheffield, Manchester and Birmingham.
The area was popular with investors during the pandemic but, according to Laila Keeling of Reeds Rains Hanley, an estate agency, younger owneroccupiers have made a comeback. “There has definitely been an increase in demand from first-time buyers,” she said. “Stoke- on-Trent is cheaper than surrounding cities and buyers can get more for their money.”
The most popular homes in the city for first-timers are in the outlying Birches Head area and ST2 postcode, where a greater supply of semi- detached family homes can be found. The more central ST1 area, with its rows of terraced houses, is more popular among investors, said Ms Keeling.
An hour’s drive to the east, first-time buyers can find another affordable yet desirable hotspot. The average house
‘There was definitely a bidding frenzy among first-time buyers coming out of lockdown’
price in Derby is £137,806 and buyers need six times their earnings to buy – more than in Stoke- on-Trent but still lower than the West Midlands regional average ratio of 6.4.
THE SOUTH
First-time buyers in the south of England have the best chance to get on the property ladder in the port cities of Southampton and Plymouth. Here, buyers need to spend an average of 7.5 times their salary to purchase – higher than hotspots in other regions but lower than the South West’s average ratio of 8.4.
The average home in Southampton costs £183,341, though those with smaller budgets should try Plymouth, where the average property costs £ 151,552. However, first- time buyers in the latter generally stretch their budget up to £240,000, according to Alice Thatcher of Aspire Estate Agents.
“There was definitely a bidding frenzy among first- time buyers last year as they came out of lockdowns having saved a deposit, although this is settling down a bit now,” she said. “Properties at the lower end of the market always get a lot of interest, so we do see quite a few frustrated firsttime buyers pipped to the post by cash competitors.”
Semi-detached houses are typically most popular with first- time buyer couples, while single people are more open to buying flats to get on the ladder, especially if they can afford to buy in Plymouth’s more expensive and sought-after Barbican neighbourhood.
Plymouth has an employment rate of more than 57pc and location is key for first-time buyers who work locally, said Ms Thatcher. “The dockyard is a huge employer in the city and a buyer generally wants to be within walking distance if they work there.
“Those who can buy a bit further out are particularly drawn to the suburbs of Peverell, Plympton and Plymstock, which offer more space for buyers looking for semi-detached homes.”