House prices at an all-time high in Exeter

New figures have revealed that Exeter is now the 10th least affordable location in England for first-time buyers.

Howard Lloyd www.devonlive.com

The first Homes scheme affordability index – compiled by online mortgage broker Mojo Mortgages – looked at various factors affecting home affordability in June 2021 including house prices, average annual salary and monthly take-home pay to work out where in England was most and least affordable.

Based on the average monthly mortgage payment as a percentage of income, Exeter was the 10th least affordable location in England for first-time buyers with the average monthly mortgage repayment taking up 35.03 per cent of a couple’s take home pay.

This is based on an average property price in the city of £327,165 and an average annual salary of £25,881, with a 10 per cent deposit and a mortgage term of 30 years at 3 per cent interest.

Oxford was the least affordable location for first-time buyers (49.37 per cent) with Bath (47.65 per cent) and London (47.12 per cent) making up the top three highlighting the difficulty of getting onto the property ladder in these areas.

In contrast, it was Bradford that was most affordable for first-time buyers.

With an average property price of £145,981 and an average annual salary of £28,790, this equated to 14.30 per cent in terms of monthly mortgage payments as a percentage of income – the lowest in England.

The figures have been released following the launch of the Government’s First Homes scheme this month, which is designed to help first-time buyers and key workers onto the property ladder in their local areas that might otherwise have had to move to another city to afford their first home.

First Home properties will be priced at a discount of at least 30 per cent of the original market value to allow more affordable deposits and mortgages with prices being capped at a maximum of £250,000 (£420,000 in Greater London).

For example, for those in London that purchase a property under the scheme, they can expect to pay on average around £766 less a month on their mortgage repayments, taking their percentage spend of income from 42.17 per cent to 32.97 per cent – a significant saving.

This discount will apply to the lifetime of the property, meaning that same percentage discount will apply when the home is resold in the future.

“While of course it’s important to remember the 30 per cent plus discount will apply throughout the lifetime of the property, and will apply when you eventually sell for the first time, a First Homes scheme property is still very much worth considering regardless of location as an option for first-time buyers looking to get onto the property ladder,” said Cassie Stephenson, director of mortgages at Mojo Mortgages.

“The savings available – particularly allowing first-time buyers access to higher LTV (loan to value) mortgages through reduced deposits – could also mean better access to lower interest rates and improved overall savings across the lifetime of a mortgage. Plus of course, purchasing a home is a significant long term investment towards your financial future as opposed to lining a landlord’s pocket.

“We’re excited to see how this new scheme develops over the coming months as new properties and developments continue to crop up across England.”

The 10 least affordable areas in England based on mortgage as a percentage of income were as follows:

  • Oxford (49.37 per cent)
  • Bath (47.65 per cent)
  • London (47.12 per cent)
  • Reading (38.98 per cent)
  • Poole (38.72 per cent)
  • Cambridge (38.49 per cent)
  • Brighton (37.19 per cent)
  • Slough (36.68 per cent)
  • Cheltenham (36.38 per cent)
  • Exeter (35.03 per cent)

The top 10 most affordable areas for first-time buyers as follows:

  • Bradford (14.30 per cent)
  • Blackpool (15.94 per cent)
  • Stoke-on-Trent (17.35 per cent)
  • Sunderland (17.56 per cent)
  • Middlesbrough (17.70 per cent)
  • Hull (17.72 per cent)
  • Carlisle (17.82 per cent)
  • Durham (18.10 per cent)
  • Liverpool (18.56 per cent)
  • Bolton (19.19 per cent)