A drop in both house prices and mortgage rates has improved the affordability of housing in the United Kingdom to its highest level since 2003.
According to research from British property web site zoopla.co.uk, the average British income earner can now afford 58 percent of all homes on the market, a significant rise from 2007's record low level of 34 percent.
The best affordability ratio in the last 10 years was in 2002, when the average British income earner could afford 66 percent of all homes on the market.
Zoopla calculated the affordability rate based on data from regional markets. It used the median income, average house price, and prevailing mortgage rates in each market to calculate the affordability rate. A house is considered "affordable" if one-third of the median income covers the mortgage payment.
In 2002, the maximum price for an "affordable" house under these guidelines was £118,934 ($177,883 at current exchange rates). Today, increased incomes and lower interest rates have raised this price to £188,423 ($281,813).
The national figure, however, covers wide regional variances, with cities in the north generally more affordable than those in the south. London, the capital, had the least affordable housing by a wide margin: despite having the highest median income in the UK, Londoners could afford only 32 percent of houses available there, still a significant improvement from 2007's record low figure of 11 percent. Bradford, where residents could afford 82 percent of the homes on the market, was the most affordable community in the UK, followed by Hull (81 percent), Stoke-on-Trent (80 percent), Birmingham and Coventry (tied at 78 percent). Bringing up the rear behind London were Southampton (44 percent), Bristol (53 percent), Norwich (58 percent) and Leicester (59 percent).
Written by Sandy Smith
For HULIQ.com
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