The average first-time buyer home costs five times a person's earnings

The stamp duty holiday earlier this year helped many first-time buyers onto the property ladder.

But now, with house prices surging, a new report has shed light on just how difficult it is for many to afford a place of their own.

According to new data, the average first-time buyer will have to cough up five-and-a-half times their typical annual earnings to get on the property ladder.

And in London this figure goes up to nine times.

The data, gathered by Nationwide Building Society, says that a 20% deposit on a home now equates to 110% of the pre-tax income of a typical full-time employee.

It’s worth pointing out that this is also at a record high – up from 102% a year ago.

Andrew Harvey, a senior economist at Nationwide, explains that in the third quarter of 2021, price-to-gross earnings was 5.5 – surpassing a previous high of 5.4 in 2007 and topping the long-term average of 3.8.

Of course this number varies across the UK, too. 

He said: ‘While there continues to be a significant gap between the least affordable and most affordable regions across the UK, this has remained broadly stable over the last year.

‘London continues to have the highest house price to earnings ratio at 9.0, although this is still below its record high of 10.2 in 2016.

‘Scotland continues to have the lowest house price to earnings ratio in the country at 3.4, closely followed by the North (of England) region at 3.5.’

Because of this ratio of earnings to deposit required, lots of first-time buyers rely on financial support from family members to help them make the move.

Andrew added: ‘In 2019/20, around a third of first-time buyers had some help raising a deposit, either in the form of a gift or loan from family or a friend or through inheritance.’

This figure is also up 27% from 25 years ago – showing just how many people rely on extra help to afford a house in today’s climate.

Average first-time buyer house price-to-earnings ratios in the third quarter of 2021, according to Nationwide Building Society:

– North of England, 3.5

– Yorkshire and the Humber, 4.0

– North West, 4.2

– East Midlands, 5.0

– West Midlands, 5.0

– East Anglia, 5.6

– London, 9.0

– South West, 6.4

– Wales, 4.6

– Scotland, 3.4

– Northern Ireland, 4.5

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