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Join Rod on day 1 of his 2011 USA Property trip
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Axis USA WebinarHouse Prices Most Affordable Since 2003
House price site www.zoopla.com has just released new data that shows that UK house prices are more affordable than at any time since 2003.
They calculate the affordability rate using median incomes and average house prices in each geographic area along with prevailing mortgage rates. It judges a home to be ‘affordable’ if one-third of the median income is sufficient to cover mortgage repayments. In 2002 using one-third of income to meet mortgage repayments allowed a purchase of £118,934 whereas today, given the current low financing costs and increased incomes, the same proportion of income finances a purchase of £188,423.
The average UK wage earner can now afford to purchase 58% of all UK homes, up from 34% in 2007 when price peaked. This is the highest affordability level since 2003 and getting close to the highest level for ten years.
The five most affordable cities are: Bradford, Hull, Stoke-on-Trent, Birmingham and Coventry.
The five least affordable cities are: London, Southamption, Bristol, Norwich and Leicester.
This increasing level of affordability is due to price falls, continued low interest rates and increased income levels over the last few years.
Our view is that this level of affordability reduces the likelihood of a 'double dip' in house prices, provided that mortgage finance continues to be available at least at current levels.
It also means that first time buyers will start moving back into the property market fairly soon, which underlines our view that the next price move will be upwards.
It's yet more data that supports Axis view that we are at the bottom of the market and that if investors can find good deals with decent discounts BMV they should grab them whilst prices are this cheap!
View our UK Investment Property Deals
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Rod Thomas FCA
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