Skipton launches home affordability calculator as 80% have ‘insufficient’ deposit savings
The West Midlands, London and Wales, were identified as the least affordable areas for first-time buyers in Great Britain.
Skipton Building Society has launched a home affordability calculator to help potential buyers navigate the UK's "challenging" property market.
Combining data on the affordability of purchasing a property with the affordability of running one into a single metric, Skipton’s tool provides a new perspective on accessing and moving up the housing market.
This comes following new research from the mutual that unveiled the stark reality of purchasing a property in Great Britain today.
According to the new Skipton Group Home Affordability Index, created in partnership with Oxford Economics, only one in eight potential first-time buyers can purchase the average first-time buyer house in their area.
For first-time buyer households earning £22,850/yr or less, fewer than one in 100 can afford to take the first step onto the property ladder in their local area. Even among those earning over £71,250/yr, only 44 percent can afford to buy their first home in their local area.
More startlingly, almost 80 percent of potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area.
Meanwhile, nearly four in 10 renters spend 45 percent or more of their income on essential housing costs, compounding their inability to save for a deposit.
Stuart Haire, Skipton Group CEO, said: “Being able to have somewhere to call home is widely recognised as one of the most important issues facing millions of people up and down the country.
“But to fully understand the problem, we felt we needed to move beyond the examination of house prices, income, and rent to a deeper understanding of what is driving overall housing affordability. That’s why we created the Home Affordability Index.
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“For some, our findings paint a bleak picture, notably for first-time buyers. The combination of high housing costs, insufficient savings, and significant regional disparities underscores the urgent need for collaborative and targeted interventions to support aspiring homeowners.”
Mr Haire added: “The scale of the challenge of housing affordability is so great that no one person can lead that charge, so we are calling on the Government to work cross-department, cross Whitehall, cross-sector and cross-industry, so that together we can really start to solve an issue that impacts so many people. We stand ready to be part of those efforts”.
According to the Index, first-time buyers' affordability levels are worst in the West Midlands, driven by low deposit levels and moderate house prices. London faces high levels of house prices, while in Wales, lower income levels reduce households' buying potential.
In contrast, first-time buyers face the best prospects in Scotland, driven by lower house prices, and the East of England, due to above-average income-to-house price ratios.
But despite improving during the pandemic, overall housing affordability has fallen over the course of the cost-of-living crisis and despite its recent recovery sits almost exactly where it was at the beginning of 2020, with limited signs of improvement on the horizon.
Alex Stewart, associate director at Oxford Economics, said: “The Skipton Group Home Affordability Index highlights the challenges faced by households across Great Britain. It combines data on the affordability of purchasing and running a property to provide a comprehensive picture of housing affordability.
“The economic shocks of the last four years have led to fluctuations in the Index, but our analysis shows that housing affordability today is broadly unchanged compared to the start of this decade.
“For those who want to explore affordability in their area, Skipton’s interactive tool brings the challenge to life, allowing first-time buyers and existing homeowners the chance to see where they might be able to afford.”
Skipton’s interactive online tool enables users to explore living affordability and buying affordability across Great Britain for different types of households across age, income, region and family type.
Skipton Group is led by Skipton Building Society and is made up of different organisations, including the UK’s largest estate agency, Connells.
