The Daily Mail discusses the impact of rising mortgage rates on homebuyers in the UK and reveals the most and least affordable areas to buy a home in each region. According to Hamptons International, one in four households moved to a more affordable area this year, up from one in five the previous year. This trend is driven by higher mortgage rates, which have increased by 25% for first-time buyers in the past year alone. As a result, many first-time buyers are purchasing smaller homes in more affordable locations.
Main Points
- House prices have decreased in the past year, but higher mortgage rates are pricing many potential buyers out of their desired homes and locations.
- 1 in 4 movers this year opted for more affordable locations, a noticeable increase from the previous year.
- First-time buyers have made a surprising move by purchasing 28% of homes across Great Britain this year, even with higher mortgage rates. They are making compromises by choosing smaller homes in more budget-friendly areas.
- The burden of higher mortgage rates is especially hard on first-time buyers, with their mortgage costs jumping by 25% over the past year due to rising interest rates.
- The typical UK home now costs 6.7 times the average earnings. However, this ratio varies greatly depending on the region:
- Most affordable: Inverclyde, Scotland (Average house price is 2.9 times the average annual earnings)
- Least affordable: Westminster or the City of London (Average house price is 16 times the average annual income)
- The article also provides a detailed comparison between the most and least expensive local authorities in various regions, indicating how much house prices differ even in geographically close areas.
Examples:
- Blackpool and Trafford in the North West are only 49 miles apart, but their house price to earnings ratio differs significantly.
- Portsmouth, a coastal city, offers house prices that are 5.2 times the average annual earnings, whereas Mole Valley in south Surrey has prices 13.2 times higher than earnings, despite being just 60 miles apart.
- In London, there’s a stark contrast between the City of London and Barking and Dagenham in terms of affordability.
Expert Opinions:
- Darren Sellwood recommends Blackpool as an attractive area for property investments due to its potential for rental income, ongoing development projects, and a growing tourism industry.
- Gemma Atkin praises Portsmouth for its historical charm, range of properties, and efficient transport links.
- Henry Pryor emphasized that people have historically moved to places they can afford. With the rise of remote work, many are considering moving further from their workplaces if it means living in a more affordable area. However, this isn’t an option for everyone, especially for professions that require physical presence.
Conclusion
The trend suggests that while house prices have dropped, the challenge of higher mortgage rates means that potential homeowners, especially first-time buyers, are looking to more affordable areas to buy property. This movement isn’t just about cost but also about finding areas that offer value for money, good transport links, and growth potential. The new working-from-home norm makes it easier for some, but not all, to make these moves.