A new index shows that only one in eight potential first-time buyers can purchase the average FTB home in their area.

The Skipton Group – which includes the Connells lettings agency chain – says the picture is particularly bleak for first-time buyer households in the bottom quarter of workers in Britain, earning less than £22,850. For these households, fewer than one in 100 can afford to take the first step on the property ladder in their local area.

Even among those earning over £71,250 (the top quarter of all earners across Britain) only 44% can afford to buy their first- time buyer home in their local area. 

Almost 80% of potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area. And nearly four in 10 renters spend 45% or more of their income on essential housing costs, compounding their inability to save for a deposit.

Skipton says first-time buyers’ affordability levels are worst in the West Midlands (driven by a combination of low deposit levels and moderate house prices), Wales (where lower income levels reduce households’ buying potential), and London (due predominantly to high house prices)

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).

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. 

Skipton Group chief executive Stuart Haire says: “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.

“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. 

“The scale of 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”.