A MAP has revealed the UK’s 10 most expensive towns and cities – where an eye-watering £200k deposit is needed to buy a home.
Research has shown the average house prices and how much potential buyers need to save up in order to afford them.
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April Mortgages compiled the data and drew up the 16 most unaffordable areas to get on the property ladder.
St Albans, in Hertfordshire, ranked top of the list, with the average home costing an eye-watering £591,000.
Meanwhile, the typical salary is around £41,000, meaning residents would need to have a £406,000 deposit saved up to get a house.
Guildford, in Surrey, came in second place with properties going for roughly £512,000 on average.
With locals earning about £44,000 a year, they would need a hefty deposit of £314,000 to get a mortgage and home.
In third place was Cambridge, just north of London, where similar statistics were recorded.
The average house price was just over £500,000, while income was around £43,000 and deposits required were £308,000.
Most banks will only lend home buyers 4.5 times their gross annual salary, which means around £180,000 for someone earning the salaries set out above.
Mark Eaton, chief operating officer at April Mortgages said: “The speed at which house prices are rising is leaving many prospective buyers unable to afford a home.
“House prices have soared over the last 20 to 30 years and are estimated to be worth over nine times the average household income.
“Borrowers on lower or average salaries are facing an almighty battle to save a large enough deposit to climb onto the property ladder.”
Mr Eaton argued banks need to “wake-up to new ways of thinking” when it comes to mortgages in the midst of an affordability crisis.
Meanwhile, some of the most affordable areas to buy a house included Blackburn, in Lancashire, Darlington, in County Durham, and Sunderland in Tyne and Wear.
This comes as economic turmoil and a low supply of homes coming on to the market has seen property prices soar over the past few years.
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Alice Haine, personal finance analyst at Bestinvest, said while potential rate cuts and easing inflation could help buyers “affordability levels remain stretched by historical standards.”
But, she added the prospect of more support from the Government if “proposals to loosen lending rules go ahead” could help improve the outlook.
Banks could soon be encouraged to offer more loans to people with smaller deposits and loosen limits on how much they can borrow.
Meanwhile, affordability checks lenders use to see how much you can pay off each month, could also take into account rental payments.
A major barrier for many buying a first home is the stringent checks that look at income to calculate this.
The potential shake up comes as part of plans by Chancellor Rachel Reeves to kickstart the economy.
One of the ideas reportedly floated is to allow banks to give more loans to buyers with smaller deposits.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.
Help to Buy equity loan – The Government will lend you up to 20% of the home’s value – or 40% in London – after you’ve put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you’re restricted to specific ones.
Mortgage guarantee scheme – The scheme opens to new 95% mortgages from April 19 2021. Applicants can buy their first home with a 5% deposit, it’s eligible for homes up to £600,000.
Deposits are cash payments paid upfront by a person looking to buy a house and are worth a percentage of the property’s value.
Most first time buyers pay a 20% deposit on their first home.
In December 2024 the average price of a house was £360,197, according to Rightmove.
That means wanna-be buyers would need to pay a deposit of £72,000 in order to be accepted for a mortgage.
Meanwhile, extra stamp duty relief available to first-time buyers since 2022 will end in April 2025.
As a result, a first-time buyer purchasing a property valued at £425,000 will incur a stamp duty charge of £6,250.
A glimmer of hope can be found in the Monetary Policy Committee (MPC), the Bank of England’s rate-setters, cutting the base rate from 4.75% to 4.5% last week.
The base rate is used by lenders to determine the interest rates offered to customers on savings and borrowing costs.
A base rate cut can mean that mortgage rates are lowered, which is good news for homeowners.
Earlier this week, Santander launched a two-year and five-year fix with a rate of just 3.99%.
It’s the first sub-4% mortgage on the market since November last year.
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