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If You’re A First Time Buyer You Should Move To Aberdeen

Thursday 21 February 2019 Data Insight & AnalyticsProperty Development

Olivia Dunn's picture
By Olivia Dunn

Over the last 10 years homeownership rates have been declining amongst young adults in the UK, primarily due to house prices rising at a higher rate than the average salary for 25 to 34 year olds. A recent study by the Institute of Fiscal Studies highlighted that since 1997 the average house price in England has risen by 173%, with this figure rising to 253% in London. In tandem to this, the average salary of young adults has only increased by an average of 19%.

Using CACI population data, the number of households, income and house value, we have identified the top 10 most and least affordable locations in the UK for first time buyers, as well as the significant disparity between the affordability of houses in the North vs. South.

 

The North / South Divide

Unsurprisingly, when the affordability of housing for first time buyers is mapped across the UK there is a clear divide between the North and South. Areas within and around London are some of the least affordable areas within the UK, reflective of the sharper rates at which house prices have risen over the past two decades. This means that the high proportion of potential first time buyers who reside within these areas won’t be able to afford to buy a house in their local area. While further North housing becomes more affordable for first time buyers, notably Scotland and Northern Ireland. However, there are some anomalies in the North such as Harrogate and South Lakeland, which is likely due to the affluence, high demand within these areas and lower supply of houses.

 


House price heatmap of the UK

 

TOP 10 LEAST AFFORDABLE AREAS FOR FIRST TIME BUYERS

London dominates the table for the top 10 least affordable areas for first time buyers, with only Oxford featuring from outside of the capital; this ranking is based on the combination of average household income of first time buyers, average house price and the % of first time buyers.

Westminster tops the table with a high proportion of first time buyers who are likely to move and an average house price 3111% above the average household income for this age group.

While Kensington and Chelsea’s average house price is greater, Westminster ranks higher due to a greater proportion of first time buyers who are likely to move.

Of the least affordable areas, Oxford has the highest proportion of first time buyers (50%), followed by Tower Hamlets (47%), reflective of the high proportion of young professionals within these areas; a high proportion of these buyers are forced out of their area in order to get onto the housing ladder. Instead they have to buy in less desirable areas, often leading to gentrification, with good examples including Streatham and Woolwich. Alternatively, many young professionals are also opting for shared ownership as a way to get onto the housing ladder; as a result, this is increasingly becoming accounted for by property companies - Nine Elms and Battersea Power Station residential developments are good examples of this.

 


Source: CACI Paycheck, StreetValue, Up to Date Demographics

 

TOP 10 MOST AFFORDABLE AREAS FOR FIRST TIME BUYERS

While the average house price difference between the top and bottom locations is 543%, the difference in household income is only 46%.

With the exception of Southampton, all locations which feature in the top 10 most affordable areas are situated in the north of England and Scotland. Aberdeen is ranked as the most affordable location for first time buyers, with an average house price of £180,495 and the highest average household income of the top ten. Of this ranking, Nottingham and Manchester have the highest proportions of first time buyers, which are both cities popular among young professionals.

 


Source: CACI Paycheck, StreetValue, Up to Date Demographics

 

To discover how CACI can give you a greater insight into the challenges for first time buyers in your area, get it touch with one of our experts.

Over the last 10 years home ownership rates have been declining amongst young adults in the UK, primarily due to house prices rising at a higher rate than the average salary for 25 to 34 year olds. Could Aberdeen be the answer?

If You’re A First Time Buyer You Should Move To Aberdeen