First-time buyers need an extra £7,350 income to buy a home
First-time buyers are driving the housing market, despite needing an extra £7,350 income to buy a home.
UK house price growth slowed to 3% in March, putting the average property sold in the UK at £259,700, according to Zoopla.
The property site said the worst of the price falls is over, with demand for homes reaching its highest level so far this year after Easter.
The market is being driven by first-time buyers, as many are being pushed out of the rental market amid steep increases.
First-time buyers (34%) were the largest group of home buyers followed by existing owners buying with a mortgage (31%) and cash buyers (25%).
With rental costs up 11% or £1,120 over the last year, as well as a third fewer homes available to rent than the long run average, many are considering home ownership, provided they have the necessary deposit.
Read more: UK house prices rebound in April after seven month decline
However, first-time buyers now need an extra £7,350 on their gross household income to buy a three-bed house — a total of £55,900 — and an additional £4,900 — a total of £51,000 — to buy a two-bedroom home.
Richard Donnell, executive director at Zoopla, said: “Housing market conditions continue to improve as buyers return to the market and more sales are agreed. House prices are posting very modest falls and are expected to be just 1% lower by the end of the year. The worst of the pricing adjustment appears to be behind us.
“We expect first time buyers to have another strong year in 2023 having been the largest buyer group last year. They need more income to buy but are starting to look for smaller homes and get away from rapid growth in rents.”
The income needed is even higher in areas such as London and the South East, where first-time buyers need an additional £12,150 on their gross household income for a three-bed property, or an additional £7,300 for a two-bed property.
According to figures from the Office for National Statistics (ONS), the average income has only increased by £4,800 since early 2020.
Read more: This is how much it now costs to rent in London
Regionally, Scotland and the North East are seeing high levels of new sales agreed thanks to more attractive affordability levels.
In London a sustained period of weak price inflation over the last six years is helping to improve affordability.
House price growth is also strong in areas that provide easy access to urban cities. For example, house price growth remains above average (over 5%) in areas such as Oldham in the North West, which is accessible to Manchester, Wolverhampton in the Midlands, near to Birmingham, and Selby in Yorkshire which is close to Leeds.
Watch: How much money do I need to buy a house?
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