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Entry Level Homes are Out of Reach for Many First-time Buyers

A new report reveals that a quarter of neighbourhoods in England and Wales are out of reach for first time buyers, as average incomes fall behind the house price growth.

Property Prices England

A new report reveals that a quarter of neighbourhoods in England and Wales are out of reach for first time buyers, as average incomes fall behind the house price growth.

Following a staggering increase in prices of nearly 20% over the last decade, the cost for existing entry level homes in England and Wales stood at an average of £140,000 in 2016, according to the latest figures from the Office for National Statistics (ONS), while new properties were priced close to £180,000.


ONS defined entry level properties as those that are priced half way between the bottom value line and middle value line in each specific area.


While many first time buyers end up paying more than the average value of entry level properties, the amount paid varies depending on where in the country the property is located.


Those who bought their property in England paid on average more than £198,000 for their property, whereas first-time buyers in London spent an average of over £423,000.


As a result, an aspiring homebuyer in the capital would need an annual income of £60,000, along with £55,000 in savings, in order to pay a 15% deposit towards the mortgage of their first home.


While northern parts of England and Wales have more affordable areas where first-time buyers would need less of a deposit, the average income in these areas is generally lower, according to ONS.


The organisation also pointed out that increasing house prices is not the only issue for prospective homebuyers, with purchasers needing to account for the cost of a deposit, stamp duty, legal fees and other associated moving costs when saving up for a home or receiving financial help from parents to secure a property.


Buying a property in a neighbourhood in Reading would require first-time buyers £53,500 of savings to cover all of the additional costs – which is more than the average annual income in the area.


ONS revealed last month that property prices saw a year-on-year increase of 7.7% in December 2016, reaching an average price of £236,000.

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