Ability to buy a home improves for the third quarter in a row to be best in 13 years
The North fares better than the South and working families are better off in every region.
Hamptons International published the findings of its quarterly (Q2 2015) Ability to Buy index today. It shows that the ability to buy a property has improved for the third quarter in a row and is now the best it has been for 13 years. A fall in the cost of essentials together with a rise in average UK incomes in Q2 2015 compared with a year earlier have all helped considerably as have mortgage payments which fell in Q2.
Families working full time with children have seen the greatest improvement in their ability to buy a home over the last year while first-time buyers in London are among the worse off.
The Ability to Buy Index for Q2 2015 shows:
• Ability to buy in England and Wales has improved for the third consecutive quarter and in Q2 2015 is the best it has been for 13 years. The index increased by 2% over the last year to bring it to its highest level since Q1 2002.
• Ability to buy is 40% up on 2007 when it was at its worst, and is just 4% below the best ever recording since the index began in 1997. In the North East and Wales ability to buy is the best it has been since our records began.
• After paying for essentials and mortgage payments, families working full-time with children – in almost every region – saw the biggest improvement in cash terms with an average of an extra £95 per month left over. But first-time buyers in London were £6 worse off per month than this time last year.
• The improvement is due to a fall in the overall cost of essentials, coupled with a rise in average UK incomes of 3% in Q2 2015 compared with a year earlier. Mortgage payments have also fallen in Q2, despite a rise in average house prices.
• Ability to buy improved in all parts of England and Wales except London in the year to Q2 2015. It improved or remained the same everywhere except the North West, London and the South West between Q1 and Q2 2015.
• The North-South divide in ability to buy is still very much a reality. Ability to buy in the North and Midlands is continuing to improve while conditions are much more difficult in the South.
• As economic conditions get better, wages grow and interest rate rises remain far off, the cost of servicing a mortgage will become more affordable. The biggest hurdle is saving the necessary deposit. Higher wages will help savings, but while house prices increase it will become more difficult to reach the required sum.
The Hamptons International Ability to Buy Index is the only affordability index to measure the pressures home buyers face from changes in the cost of living as well as changes in interest payments and house prices.