2019 sees an increase in affordable housing | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 13/12/2019

During 2019, houses have become more affordable in nearly two-thirds of local authority areas in the UK, research carried out by Yorkshire Building Society reveals.

The research found that a combination of stagnating or falling house prices along with rising wages has led to houses becoming more affordable in 233 areas, which in some areas has seen a 20% increase in housing affordability compared to a year ago.

Saying this, it was not good news for all first-time buyers, as homes in 132 local authority areas became less affordable than a year ago. This, according to Yorkshire Building Society, is mainly due to house prices rising more quickly than wage increases in these areas.

Nitesh Patel, strategic economist at Yorkshire Building Society, said: “In the past year, we’ve seen house price growth continue to slow, stall completely, or even fall. At the same time, salaries have increased, which means wage growth has begun to catch up with house price growth. This is why we’ve seen more affordable house prices in the vast majority of places.

“This is most striking in London, where six of the capital’s boroughs occupy the 10 largest increases in house price affordability. But it’s important to remember, this is all relative. London still has some way to go before house prices are truly affordable for someone on median earnings.”

He continued: “House prices have grown by an average of 43% since 2009 – twice as fast as earnings (21%) in the same period. The difficulty in affording to buy a home is one reason why house sales have not picked up in the past year, even though some of the key drivers for the housing market remain positive.

The longer-term outlook for people wanting to buy a home remains to be seen. Demand for homeownership is still strong and supply is limited, so over the short-to-medium term, house prices could increase faster than earnings. This may continue to cause issues for home buyers, particularly those buying their first home.”

First-time buyer mortgage rates fall

There was further good news for first-time buyers able to afford a property this year, as mortgage rates on 95% loan-to-value (LTV) deals remained highly competitive throughout the year. In fact, research carried out by Moneyfacts.co.uk found that the average rate on two year fixed 95% LTV mortgages fell from 3.27% in November 2019 to 3.25% in December, while average rates on five year fixed 95% LTV deals dropped from 3.60% in November 2019 to 3.57% in December. Currently, the best two year fixed rate deal available on a 95% LTV for those in all locations comes from Newcastle Building Society, which is offering 2.59% (5.1% APRC) fixed until 28 February 2022 and then reverts to 4.49%. First-time buyers looking to lock into a five year deal can currently get the lowest rate on a deal that does not require a linked product from Nottingham Building Society, which is offering 2.75% (4.6% APRC) fixed until 1 March 2025 and then reverts to 5.75%.


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