Despite a fall in average first-time buyer incomes and rising first time buyer property values, a rise in the average income multiples offered by lenders (based on CML data) has led to an improvement in affordability this month, according to The FindaProperty.com May House Prices & Affordability Index.
The average entry level home is now almost 4.9 times gross household earnings. This compares favourably with 5.5 times at the end of 2008.
In terms of the deposit needed, first-time buyers must find £300 less than last month. The ‘affordability gap’ is now £56,449, or almost 1.8 times average household earnings. At end December 2008, it was over £70,000, or 2.4 times income.
First-time buyer homes also increased for the fourth month in a row, with a 0.3% rise this month, following the 0.3% increase in March. The average entry level home is on the market at £155,677, which is 1.2% higher than a year ago (£153,880) and the highest level since February 2009.
Asking prices rose for the fourth consecutive month, with a 0.6% increase to £219,748. Since May 2009, they have risen by 1.8%, up from £215,761.
Home mover prices rose by 1.0% this month to £280,735. This is the second consecutive month of rises for this property type following five months of falls. They are 1.2% higher than a year ago.
Houses were up 0.7% and flats 0.2% in May. Annually, houses are 2.1% higher than May 2009 while flats are up 1%.
The stronger performance of houses was led by another strong recovery in prices commanded by larger 5+ bed houses (+1.6% this month, and +4.8% annually) as well as 4 beds (+0.5% monthly, +1.7% annually).
Smaller houses and flats recorded more modest rises this month, of between 0% and 1.0%.
Stocks grew by 8% in May, after rises of 4.2% and 5.6% in the previous two months. First time buyer property stocks were up 7.5% this month. There is now almost as much stock available as in April 2009.
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