Affordability pressures on home buyers easing says Halifax

Affordability pressures on home buyers have eased including a lower average house price to earnings ratio, wage growth outpacing house price inflation and mortgage costs as a percentage of income dropping significantly, the Halifax has revealed.

The mortgage giant says the average house price to earnings ratio has fallen from 6.55 to 6.22, wages are growing by 5% compared to house price inflation at 3.8% and the house price to earning ratio is steadily decreasing from the 2022 high of 7.22.

The Halifax says that this good news comes after a long and difficult period for estate agents and that a reduction in demand from buyers, from the highs of 2021, is one of the reasons house prices have remained flat for much of the last two years, with the average house price of £292,410 in 2022 comparing to £292,508 in 2024.

Gradual

Amanda Bryden, (main image) Head of Halifax Mortgages, says: “Housing affordability has improved over the past year, thanks to stabilising property prices, strong wage growth, and easing interest rates.

“That’s great news for first-time buyers and existing homeowners looking to remortgage or move up the property ladder.

“However, while homes are becoming more affordable, the progress has been gradual. Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.”

Toby Leek, NAEA Propertymark President says: “Buyers’ affordability continues to grow, not only as property prices start to align with wages, but also as interest rates steadily improve which has allowed more competitive mortgage products to enter the market compared to what was seen at the start of the year.

“Additionally, with Stamp Duty increases due from April 2025 in England and Northern Ireland, we expect movers to be pushing through and completing on their home purchases in order to save, in some cases, thousands of pounds as they move into the New Year.”

Fragile

Karen Noye, mortgage expert at Quilter, says: “Unfortunately, while affordability has improved slightly over the past year, this progress remains fragile.

“Wage growth, though outpacing house price inflation, may falter in the face of the government’s proposed budget changes, particularly around employer National Insurance Contributions (NICs), which could constrain businesses’ ability to deliver meaningful pay rises. Without robust wage increases, any affordability gains could quickly evaporate, particularly given the persistent supply and demand issues plaguing the UK housing market.”