Despite recent commentary that first-time buyers are being priced out of the property market, research from mortgage broker Savills Private Finance claims property is more affordable today than it was 10 years ago.
The research revealed that as a percentage of salary, mortgage repayments for first-time buyers are at a lower level across the UK ‘ including hotspot London ‘ than they were in 1992.
According to Savills, mortgage repayments on the average UK property account for 22% of a first-time buyer’s salary, compared to 33% 10 years ago. In London, the current figure increases to 33%, but this is still lower than 34.6% ‘ the percentage of salary paid out a decade ago.
Mark Harris, director of Savills Private Finance, said: ‘Although current sentiment suggests it is increasingly difficult for first- time buyers to step onto the property ladder, the research we have undertaken contradicts this. While we have used high income multiples in our research ‘ over four times in the case of London ‘ many lenders are now prepared to take a more relaxed approach to multiples, focusing instead on affordability which is relatively good compared to some years.’
Other research, conducted by personal finance website Moneynet, also indicates first-time buyers are not suffering affordability problems.
According to a survey of 4,000 mortgage applicants, the average first-time buyer earns £33,776 a year, is looking to buy a property worth £142,615 and wants to borrow £114,676.
This suggests first-time buyers are a far cry from over-stretching themselves having, on average, a deposit of 20% to put down on their first home.
Both these surveys contradict recent comments from Sir Howard Davies, chairman of the Financial Services Authority.
On BBC News 24’s Business Today programme, Davies said young borrowers may live to regret taking out large mortgages and expressed concern about, ‘over-borrowed, young professionals in areas where house prices have risen very sharply.’