The average cost of a first home in UK cities

Research released by property website Zoopla has revealed that the average income needed by a first time buyer in order to afford a home now stands at £54,400.

This is an increase of 9 percent since 2016, ie. more than £4,500. This means the average deposit a first time buyer needs is £38,418.

Buying a first home in the UK’s priciest cities

The UK’s most expensive cities have actually seen a decrease in the income needed to buy a first home. Salaries needed in London, Oxford and Cambridge have fallen by an average of 5 percent since 2016.

The average income needed to buy a first home in London now stands at £84,000, some £3,250 less than 2016, which was the highest point following the global financial crash. After three years of sluggish growth and some price falls, the market in the capital shows signs of stabilising.

Oxford and Cambridge are the most expensive places after London, but again have shown reductions in the amount of income needed to buy a first home there of 3 percent and 5 percent respectively.

Looking at all UK cities, Aberdeen has the largest decrease in income required to buy, as a result of the reduction in oil prices since 2015.

What an average income will buy

The most affordable UK city in which to buy a first home is Liverpool, where the average income needed to buy is £26,137. Liverpool has also registered the highest house price increases of the 20 UK cities analysed however, so this may not last long.

The average first time buyer deposit in Liverpool is £18,449, with a first home in London at the other end of the scale needing £119,000. This assumes that a deposit of 15 percent is needed in all cities except London, Oxford and Cambridge, where a higher deposit of 25 percent might be expected to comply with loan to income limits.

The cities showing the biggest increase in income needed to buy are Leicester, with a 20 percent rise since 2016, and Birmingham and Manchester at 18 percent each.

Research and Insight Director at Zoopla, Richard Donnell, said, “First time buyers are an important group accounting for more than one in three sales. 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. While it is a factor behind weaker house price growth it supports underlying demand for rental homes.”