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Just one in eight prospective first-time buyers can afford to buy a home in their area, according to new research by Skipton Building Society.
Skipton's report shows that even people with above-average earnings are struggling to get on to the property ladder, with affordability significantly stretched in some parts of Great Britain.
Read on to find out how affordable property is in your area, and for advice on what changes might be coming for first-time buyers.
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Skipton Building Society's Home Affordability Index has highlighted the challenges facing people trying to buy their first home across Great Britain.
The Index, created in conjunction with Oxford Economics, shows that the vast majority of prospective first-time buyers are struggling to contend with high house prices and mortgage rates.
This is even the case for high earners. Skipton found that just 44% of people earning more than £71,250 a year can afford a home in the area they currently live, despite being in the top quarter of earners in Great Britain.
At the other end of the earnings scale, just 1% of prospective buyers earning less than £22,850 can afford a property.
Skipton chief executive Stuart Haire says: '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.'
Skipton's Index analyses four key metrics: buying power, house prices, housing costs and household income.
It splits Great Britain into 40 regions and provides each with a score for overall first-time buyer affordability.
Affordability is currently best in Scotland, due to the country's low house prices. The East of England also scores well, as prospective buyers there have relatively high average incomes compared to house prices.
Unsurprisingly, affordability is worst in London, driven by the English capital's high house prices. Buyers in the West Midlands also face issues saving a big enough deposit, while those in Wales are being held back by lower incomes.
The table shows how areas across Great Britain rank for affordability, according to Skipton's Index.
| Rank | Region | Country |
|---|---|---|
| 1 | Highlands and Islands | Scotland |
| 2 | Eastern Scotland | Scotland |
| 3 | North Eastern Scotland | Scotland |
| 4 | West Central Scotland | Scotland |
| 5 | Tees Valley and Durham | England |
| 6 | Northumberland and Tyne & Wear | England |
| 7 | Greater Manchester | England |
Saving a big enough deposit remains one of the most significant barriers to homeownership.
Skipton found that almost 80% of would-be buyers don't have sufficient savings to put down a house deposit in their area.
The ability to save is hamstrung by rising rents. The report shows that around four in 10 renters spend at least 45% of their monthly income on housing costs.
Unfortunately for renters, this seems unlikely to change any time soon. The latest data from the estate agency Hamptons shows rents increased by an average of 5.8% year-on-year in June.
We recently crunched the numbers to work out how much buyers would need for a 5% or 10% deposit in their area, based on the average prices paid by first-time buyers in each local authority.
The results showed the impact that location has on affordability. Buyers in some parts of Northern England and Scotland only need to save around £5,000 for a 5% deposit, while those in some parts of London require more than £30,000.
See the interactive map in our full story to find out how much you'd need to save in your area.
Skipton says it is calling on the new government to work 'cross department, cross Whitehall, cross sector and cross industry' to solve the housing crisis facing first-time buyers.
The government has already outlined some plans that could have an impact in the future.
Earlier this month, it confirmed plans to build 1.5 million new homes in England over the next five years, with a focus on affordable housing and giving priority to first-time buyers.
More homes being built could be good news for first-time buyers, with the caveats that we're unlikely to see housebuilding numbers soar overnight, and that new homes tend to be more expensive than second-hand ones.
Labour's election manifesto also included a pledge to bring in a 'permanent and comprehensive' mortgage guarantee scheme to encourage lenders to offer loans to first-time buyers.
At a time of high mortgage rates, this could be one to keep an eye on.
If you're struggling to save a deposit or are being priced out by mortgage rates, there are already some schemes available that could give you a boost.
If you're in the process of saving, you could consider opening a lifetime Isa, which offers a 25% bonus from the government on savings of up to £4,000 a year.
Anyone aged 18-39 can open an account. You'll need to have an account for a year before you can withdraw the bonus, and it is only valid on properties priced up to £450,000.
Other schemes help you buy a home at a reduced price or on a shared ownership basis.
The options vary across the UK. See our full guide on first-time buyer schemes to find out what is available in your area.
Find the best deals, avoid scams, and grow your savings with our expert guidance. From only £4.99 a month.
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It's been a slow year so far for the housing market, with stubbornly high mortgage rates impacting on the number of homes being sold and house prices.
Prices are now rising slightly on a national basis, but it's still very much a price-sensitive market. This means if you do have finance in place and are viewing properties, you should feel empowered to negotiate on price.
There are hopes that mortgage rates will fall over the coming months, with a drop in the Bank of England's base rate anticipated soon.
However, rate reductions are likely to be slow, so while there is some cause for positivity, it's unlikely that the landscape will change significantly for first-time buyers in the short term.
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