This is the first Halifax review assessing the affordability of housing for first-time buyers (FTBs) across the UK.  The benchmark used to assess affordability is the 20 year historical average house price to earnings ratio of 4.0.  The calculation is based on a single income and is, therefore, conservative.

The house price to earnings ratio has improved significantly over the past 18 months. The ratio has fallen from a peak of 5.84 in July 2007 to 4.56 in November 2008, taking it to its lowest level for more than five years (July 2003: 4.54). The proportion of local authorities (LA) in the UK where housing is affordable for a first-time buyer has more than trebled in 2008.  In 2008, the average price paid by a FTB was affordable for someone on average earnings in 14% of LAs compared to just 4% in 2007. The largest increases in the percentages of LAs that have become affordable for FTBs between 2007 and 2008 are in Yorkshire and the Humber (from 0% to 40%) and Scotland (from 30% to 67% of LAs).
     
Martin Ellis, chief economist at Halifax, commented: "There has been a marked improvement in housing affordability in many parts of the UK.  First-time buyers, in particular, are benefiting, especially outside the south of England and the Midlands.  We expect this trend to continue in 2009."

First Time Buyers Affordability - Local Authorities 2007 - 2008

Source: Halifax  

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