House price to income ratios reach 60%

30-Oct-2006

First time buyers are increasingly struggling to finance the cost of a new home, with income to price ratios reaching 60 per cent, research suggests.

A recent study by Alliance Trust has found that house price to income ratios have risen significantly since the 1970s, making it increasingly difficult for first time buyers to fund their first property purchase.

According to the results of the survey, London and the south-east are the least affordable locations for first time buyers, with house prices now 4.4 and 4.3 times higher respectively than the regional average salary.

"These figures clearly show it is becoming harder for first time buyers to break into the housing market," said Shona Dobbie, head of the research centre at Alliance Trust.

"In recent years, buy-to-let investors have taken on the traditional role of first time buyers in keeping the market going, but you really need first time buyers to sustain prices over the longer term," she added.

Scotland is now the most affordable region of Britain, with income multiples now reaching 3.2 times the average income, despite weak regional income growth; the highest levels of regional income growth were in London and the south-east, according to Alliance Trust.

For advice on first time buyer mortgages or to find out how much you can borrow and how much it would cost you, contact a good mortgage broker.

As the market for first time buyers toughens, new companies are offering new services to help first time buyers buy new properties by working with the house-builders.

Founded in 1888, Alliance Trust is a provider of self-invested personal pensions, investment dealing and plans, in addition to a number of investment wrappers such as Isas and Peps.

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