Regional first time buyer affordability
The biggest constraint to prospective first time buyers is the size of the deposit they need to raise in order to meet current levels of house price.
It’s no surprise that recent rental growth has been strongest in London as first time buyers there have to raise 120% of their income to get on the housing ladder. Deposit affordability has eased in all other regions but still lies higher than before the credit crunch.
Although loan-to-value ratios are responsible for the sharp shift upwards during the initial stages of the credit crunch, the loan-to-income ratio (size of mortgage relative to income) has compounded the un-affordability of house prices as demonstrated by the (slightly tricky to read) table below.
(yellow box = current situation, green box = 1990’s average)