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Housing affordability ratio remains high but are second steppers worse-off?

Housing affordability ratios have fallen back to pre-pandemic levels but remain high, Office for National Statistics (ONS) data shows.

The latest figures from the ONS show that in 2023, full-time employees in England could expect to spend around 8.3 times their annual earnings buying a home. The equivalent figure in Wales is 6.1 times their annual earnings.

At the national level, these ratios are similar to 2022, and represent a return to the pre-coronavirus pandemic trend after a large increase between 2020 and 2021, the ONS said.
The figures show that in 2021 the housing affordability ratio in England hit a high of 9.06 but fell to 8.26 by the end of 2023.

It is still higher than the 6.76 recorded in 2013, while the figure was below 5 times during the 1990s.

In the 318 local authorities in England and Wales, housing affordability improved in 237 (75%) since 2022, worsened in 77 (24%), and stayed the same in the remaining 1%.

It comes as research by eXp found it is actually second-steppers suffering the most from the current conditions of the property market due to a lack of appropriate stock.

The self-employed agency brand analysed the current population of the nation, splitting it down into the homebuyer demographics of first-time buyers (29 to 40), second-time buyers (41 to 64) and downsizers (65+), before also dissecting current housing stock based on property type.

It found that while first-time buyers make up just 25% of the total population, the number of homes suitable for this cohort currently account for the largest proportion of housing market stock.

There are an estimated 5.4m flats accounting for 23% of total housing stock, while some 6.6m terraced homes make up 28% of all available housing, according to eXp’s research.

In contrast, while second-time buyers may account for 47% of the homebuying population, they are facing a shortage of stock.
Semi-detached homes account for just 24% of housing stock, with detached homes forming just 8%, the research shows.

Adam Day, head of eXp UK, said: “There’s no denying that first-time buyers are at a severe disadvantage when it comes to climbing the property ladder but it’s clear that the government’s insistence on fuelling demand while neglecting supply is only making the issue worse. 

“At the same time, our research shows that when it comes to the issue of supply, the market is seriously out of kilter, with an oversupply of first-time buyer suitable homes to serve the smallest proportion of the homebuying population.

“Yes, more must be done to incentivise downsizers in particular, as it will help unclog the higher rungs of the housing market, however, we need to deliver homes suitable to do so if we have a chance of rebalancing the market.”


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