Buying their own house is something that people dream of. But sadly for many, owning their own property in the UK will remain nothing more than a dream.
Property prices in the UK have put homeownership out of reach for the average single person earning a median wage. This is supported by the fact that many existing homeowners decide to renovate their existing home instead of buying a new one.
The majority of working single people can afford to pay approximately £125,329 for a home. This means that house prices across the country would have to drop by 36 percent for most people earning a median monthly salary to be able to afford a property of their own.
What the numbers tell us about house prices across the UK
Open Property Group carried out an analysis of the property market and income salary across different regions in the UK. The statistics show that the most overpriced place to buy a property compared to the average salary for the area is Cambridge. For property here to be affordable, there would have to be a 68 percent drop in price and that is even with a 20 percent deposit. The affordable house price for Cambridge is £139,742 but the actual house price is around £440,126. Chichester comes in a close second and would have to drop 67 percent to be affordable and Oxford is third on the list where a 65 percent drop is required.
The small ray of hope for home buyers is that there is at least one place where the average single person with a 20 percent deposit and a mortgage of 3.5 times their salary can afford a home. And that is Durham. In Durham the affordable house price is £112,941 but the average house price is £100,674.In fact, Durham property price could rise by almost 12 percent and still be affordable for the average single salary earner in the area. Stoke-on-Trent is the second most affordable place to buy property and Stirling comes in third. However, it is only in Durham that house prices can rise and remain affordable. In Stoke-on-Trent and Stirling, there would need to be a drop in price of 6 percent and 9 percent respectively to make property affordable for the average earner.
What this means for first-time property buyers
As the numbers show, taking the initial step on the property ladder, is extremely difficult for Millennials even with the Government’s stamp duty exemptions for first-time buyers and the ‘Help to Buy’ scheme. Until there is an increase in affordable properties, better employment opportunities in certain areas and more incentives from the Government, first-time buyers will struggle to make their dream of owning a home a reality.