Housing affordability for first-time buyers has trebled since house prices started falling 18 months ago, according to research from the Halifax bank.
Someone on average earnings could now afford to buy their first home in 21% of local authority areas, up from just 6% in the third quarter of 2007.
The house price to earnings ratio, a key measure of affordability, is now at its lowest level for more than six years, at 4.34, down from a high of 5.84 in July 2007.
Mortgage repayments also drop
At the same time, the proportion of disposable income first-time buyers need to cover mortgage repayments has also dropped from a peak of 48% to 31% during the first quarter of this year.
But despite the improvement in affordability, the number of people taking their first step on to the property ladder remains low as potential buyers struggle to get a mortgage without a substantial deposit.
Latest figures from the Council of Mortgage Lenders show that just 9,400 people bought their first home during February, 48% fewer than a year earlier.
Halifax’s Martin Ellis said: ‘Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability.
‘Prospective first-time buyers should factor the likelihood of further house price falls into their calculations when deciding whether or not to buy.’
The Which? mortgage finder will search the market for you to find a mortgage to suit your circumstances, whether you’re looking to re-mortgage or are a first time buyer.
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