Do you earn enough to get on the ladder?
Research suggests first-time buyers need an average household income of £54,400 to buy property in major cities. VICKY SHAW takes a closer look at those figures
FIRST-TIME buyers hoping to get on the property ladder in the UK’S major cities need an average household income of £54,400, a report suggests. Zoopla, which analysed house prices in the UK’S 20 biggest cities, said the average annual income needed ranges from £26,100 in Liverpool to £84,000 in London. Across the cities looked at, the average income needed has increased by more than £4,500 over the past three years, according to the property website. But there was slight relief for those trying to buy in London - the average household income needed is £3,250 less than in 2016, following three
years of weak growth and small price falls in the capital. The research made several assumptions, including that 30% of a household’s take-home income is spent on mortgage costs, and that buyers borrow no more than four times their income. The analysis expected that buyers would have a 15% deposit to put down, increasing to 25% in the more expensive cities of London, Oxford and Cambridge. Average mortgage rates were used to calculate repayments over a 30-year term. Outside London, Cambridge and Oxford require the highest first-time buyer incomes, although like London these have also fallen over the past three years. Aberdeen has also seen a big decrease in the average income needed to get on the property ladder, Zoopla said. Leicester has seen the largest percentage increase in the income required to purchase since 2016, at 20 per cent, followed by Birmingham and Manchester, reflecting house price growth. Richard Donnell, research and insight director at Zoopla said: “First-time buyers are an important group accounting for more than one in three sales. While the average household income to buy a typical home across UK cities has grown nine per cent since 2016, weaker price growth and recent price falls have led to a five per cent reduction in the income to buy across the most expensive cities. “It will come as a modest relief for would-be buyers, although the income to purchase still remains relatively high.”
The average income needed to buy a property has increased by £4,500 in the past three years
First-time buyers will still need a chunky deposit before they get their hands on the keys to their own home