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

Gloucestershire Echo - - HOME ADVICE -

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

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