First-time buyers now need to be earning up to 24% more to get on the property ladder compared with three years ago

The minimum income first-time buyers need to purchase a home in the UK’s largest cities has increased by 18% in the past three years, Hometrack claims.

Research by the property data supplier shows first-time buyers need to earn an average of £53,000 a year to get on the property ladder in the UK’s biggest cities.

This is up by 18% from £45,000 when similar research was conducted three years ago.

The income needed to buy ranges from £25,000 in Liverpool to £82,000 in London, and has increased the most in Bristol and Manchester, up 24% to £34,770 and £58,826 per year respectively.

These statistics were worked out by Hometrack based on the average price for housing in each city, a typical mortgage rate of 2.4% in 2015 and 3.2% in 2018, and a loan-to-value of 82% now compared with 84% three years ago.

Mortgage repayments are then calculated on a 30-year basis and it is assumed a first-time buyer will spend up to 30% of their gross income on mortgage costs.

The disparity between house price and wage growth is also shown by property values increasing by an average of 14.5% over the past three years, while salaries have gone up just 7.5%, Hometrack says.

Its data shows that house prices in the UK’s largest 20 cities have grown by an average of 3.9% in the year to August. The highest growth was in Liverpool and Glasgow at 7.5% and 7.2% respectively.

Prices fell annually in Cambridge, London and Aberdeen by 0.1%, 0.3% and 3.7% respectively.

Richard Donnell, insight director at Hometrack, said: “House price growth continues to outpace earnings across 16 of the 20 cities covered by the index as buyers continue to bid up the cost of housing on the back of low mortgage rates and high levels of employment. The fastest growth is being recorded in the most affordable cities where prices are rising off a low base.

“Cities like London and Cambridge require the highest incomes to buy a home and as a result they are registering flat to falling prices.

“Meanwhile cities like Bristol and Bournemouth are starting to register slower growth as affordability pressures increase.

“Higher prices and a further drift upwards in mortgage rates means that these affordability pressures will continue to steadily build.

“However, there are many cities where affordability remains attractive and prices are expected to continue their upward trend.”

Income to buy needed in top 20 UK  cities

City

2015

2018

% change

London

£83,500

£84,250

1%

Cambridge

£76,250

£74,000

-3%

Oxford

£70,250

£69,750

-1%

Bournemouth

£50,757

£61,311

21%

Bristol

£47,283

£58,826

24%

20 city average

£44,974

£52,994

18%

Portsmouth

£41,485

£50,202

21%

Edinburgh

£41,004

£48,277

18%

Southampton

£40,709

£47,871

18%

Cardiff

£36,545

£43,043

18%

Leicester

£29,599

£36,317

23%

Manchester

£28,130

£34,770

24%

Leeds

£29,074

£34,583

19%

Aberdeen

£39,651

£34,262

-14%

Birmingham

£27,246

£33,619

23%

Nottingham

£25,937

£31,904

23%

Sheffield

£24,852

£28,530

15%

Belfast

£24,096

£27,222

13%

Newcastle

£24,567

£27,015

10%

Glasgow

£22,406

£25,607

14%

Liverpool

£21,667

£24,731

14%

Source: Hometrack 

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