The income required for first time buyers to purchase in the three most expensive UK cities has fallen slightly according to Zoopla research.
First time buyers looking to buy their first home in London need an average income of £84,000; this is £3,250 less than the amount needed in 2016 which was a high point since the global financial crisis.
This follows three years of weak growth and small price falls in the capital.
Meanwhile Cambridge and Oxford require the highest incomes of anywhere outside of London; even here, though, the income needed to purchase has by five and three per cent respectively.
Aberdeen registered the largest percentage decrease in the income required to buy of all the UK cities, this is a result of sharp price decreases in the city following the crash in oil prices since 2015.
The research, from Zoopla’s Hometrack division, is based on the assumption that the borrower can only take a mortgage that is up to four time their income.
Across 20 major cities analysed by Hometrack, the average income to buy a typical first time buyer property ranges from £26,137 in Liverpool to £84,000 in London; this is despite Liverpool registering the highest house price growth of all 20 cities analysed.
Deposit levels have increased since the global financial crisis – the average first time buyer deposit ranges from £119,000 in London to £18,449 in Liverpool - this assumes a 15 per cent deposit in regional cities and 25 per cent in London, Oxford and Cambridge.
The income to buy at a city level has grown fastest in markets where prices have been rising quickly.
Leicester has seen the largest percentage increase in the income required to purchase since 2016, at 20 per cent, followed closely by Birmingham and Manchester.
Each of these cities have seen house price growth totalling 18 per cent over the last three years.
Overall, house prices in UK Cities increased by 1.8 per cent over the 12 months to May with growth ranging from 5.0 per cent up in Liverpool to 4.2 per cent down in Aberdeen.
“Weakening city house price growth is a result of market fundamentals. Specifically, changing affordability dynamics for home buyers and the impact of successive tax changes since 2015. Together, these have impacted household buying power, and demand for housing, hitting high priced cities more than others” explains Richard Donnell, research and insight director at Zoopla.
“First time buyers are an important group accounting for more than one in three sales. While the average household income to buy a typical home across UK cities has grown nine per cent since 2016, weaker price growth and recent price falls have led to a five per cent reduction in the income to buy across the most expensive cities” he adds.
“It will come as a modest relief for would-be buyers although the income to purchase still remains relatively high. While it is a factor behind weaker house price growth it supports underlying demand for rental homes.
“Affordability remains attractive in many regional cities where house prices have not registered the gains seen in south eastern England. Liverpool has the lowest income required to buy and has the highest rate of price growth at five per cent. We expect prices to continue to increase in cities where housing is in reach of those on average incomes.”