First-time buyers hoping to get a foot on the property ladder will need an average household income of £54,000 if they want to live in one of the UK’s biggest cities, a new report has found.
Zoopla analysed house prices in 20 major cities across the UK, and found the average income needed to buy a home varied from £26,100 in Liverpool to a whopping £84,000 in London.
Across the cities looked at, the average income needed has increased by more than £4,500 over the past three years, Zoopla said.
Although it’s not all bad news: there was slight relief for those trying to buy in London – the average household income needed is £3,250 less than in 2016, following three years of weak growth and housing price falls in the capital.
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Outside the capital, residents of university towns Cambridge and Oxford require the highest first-time buyer incomes. But as in London, these have fallen over the past three years. Aberdeen homebuyers have also seen a decrease in the average income they’ll need to get on the property ladder.
Leicester has seen the largest percentage increase in the income required to purchase since 2016, at 20%, followed closely by Birmingham and Manchester, reflecting house price growth in these cities.
The researchers said they made several assumptions for the study, including that 30% of a household’s take-home income is spent on mortgage costs and that buyers borrow no more than four times their income.
The analysis was based on buyers putting down a 15% deposit, increasing to 25% in the more expensive cities of London, Oxford and Cambridge. And average mortgage rates were used to calculate repayments over a 30-year term.
Richard Donnell, research and insight director at Zoopla said: “While the average household income to buy a typical home across UK cities has grown 9% since 2016, weaker price growth and recent price falls have led to a 5% reduction in the income to buy across the most expensive cities.
“It will come as a modest relief for would-be buyers although the income to purchase still remains relatively high.”
The average incomes needed to buy a home in 2016, followed by the figure for 2019 (and the percentage change):
- Liverpool, £23,000, £26,100, 14%
- Glasgow, £23,300, £26,600, 14%
- Newcastle, £25,500, £27,200, 7%
- Belfast, £25,500, £28,800, 13%
- Sheffield, £25,800, £29,500, 14%
- Nottingham, £27,800, £32,900, 18%
- Aberdeen, £38,300, £33,700, -12%
- Birmingham, £29,600, £35,200, 19%
- Leeds, £31,300, £35,500, 13%
- Manchester, £30,400, £36,200, 19%
- Leicester, £31,700, £38,000, 20%
- Cardiff, £39,000, £44,600, 14%
- Southampton, £44,100, £48,500, 10%
- Edinburgh, £41,800, £48,700, 17%
- Portsmouth, £45,300, £50,700, 12%
- Bristol, £53,100, £59,500, 12%
- Bournemouth, £55,000, £62,300, 13%
- Oxford, £70,800, £68,800, -3%
- Cambridge, £76,000, £72,000, -5%
- London, £87,300, £84,000, -4%