You’ll need an average deposit of more than £100,000 to buy a home in London, while buyers in the North pay less than a quarter of that, according to data from Halifax. In almost all cases, you’ll need to save a deposit to get a mortgage. Without it you’ll struggle to get approved, even if you have a high income. London is unsurprisingly the most expensive place for a first-time buyer to settle down. But what are people paying in the rest of the country? Here we take a look at how much you might need to save to buy in different areas around the UK.
Where would you pay the highest (and lowest) deposit?
First-time buyers in Greater London paid an average deposit of £109,885 in 2019. In the North of England (Cleveland, Durham, Northumberland and Cumbria) the average deposit was £24,091. The North West, Wales, Northern Ireland, Scotland, and Yorkshire and the Humber all had average deposits below £30,000, while the South East, South West and East Anglia all had averages over £40,000. The proportion of the average house price covered by the deposit was relatively consistent across regions, the highest being 24% in Greater London and the lowest being 17% in Wales. This means first-time buyers are taking out, on average, mortgages at around 80% loan-to-value (LTV).
Where are house prices the lowest?
Halifax’s data also reveals the average prices first-time buyers pay for homes around the country. Again, Greater London comes in as the most expensive, with home-owning newcomers paying £453,385 on average for a property. The cheapest regions were the North of England, with an average of £136,104, and Scotland, where the average was £152,728. In effect, a £109,885 average London deposit would be enough to buy 90% of the average northern first-time buyer home outright.
The most affordable place to buy revealed
The best way of gauging affordability is not necessarily looking for the lowest house prices. Instead, compare the price of the average first-time-buyer home with the average earnings in that area. The resulting ratio shows how affordable homes are to people working locally. Burnley in the North West was the most affordable local authority district by this metric, with houses costing just 3.1 times the average salary (before income tax and National Insurance contributions). Hackney in London was the most expensive. You’d have to save your entire salary for 12.1 years (and then a few years more to cover tax) before you could buy an average first-time buyer home outright there. Nine of the top 10 most expensive local authority areas were in London, the other was Oxford. Localities in the North West, Scotland and Wales made up the top 10 most affordable areas.
The content above has been prepared for informational purpose only, and is not intended to provide, and should not be relied on for financial advice.