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Glasgow number one city for first-time buyer affordability

Posted in: Research

  • Glasgow revealed as the top spot for first-time buyer affordability across all major cities in the UK
  • The average property price in Glasgow is £122,500, while the average salary is £29,100, the most favourable ratio in the country
  • Mortgage averages 3.5 times annual salary in Glasgow, which is the lowest of all cities in the UK; comparatively London it is 11.4 times
  • Lenders will typically allow 4.5 times annual salary as a maximum

Research by OneFamily has revealed Glasgow tops the list as the best city for first-time buyer affordability, with the highest average salary when compared to the average property price. Glaswegians earn on average £29,100 a year, while the average property costs just £122,500[i].

Closely behind Glasgow is Liverpool where the average property costs £120,000, which is lower than Glasgow, but the average salary is also lower at £27,600 meaning the ratio is marginally higher. In third place is Newcastle-upon-Tyne, where the average property will set buyers back £131,200 and the average salary is £28,800.

The top ten cities for first-time buyer affordability are as follows:

Location Median annual earnings Average property costs Ratio of price v salary (after 15% deposit)
Glasgow £29,161 £122,500 3.6
Liverpool £27,596 £120,300 3.7
Newcastle-upon-Tyne £28,818 £131,200 3.9
Sheffield £27,383 £137,200 4.3
Aberdeen £30,362 £159,600 4.5
Bradford £25,443 £134,948 4.5
Sunderland £25,724 £142,543 4.7
Kingston-Upon-Hull £24,900 £140,151 4.8
Manchester £29,682 £168,900 4.8
Birmingham £28,568 £163,600 4.9

Comparatively the property versus salary ratio in London would be 11.4 times and in Brighton 10.8 times.

Not only do buyers in one of the top ten cities face a more affordable mortgage, it also means they are able to get on the property ladder much quicker, when they are saving towards a first home.

On average, across the UK, it takes first time buyers 10 and a half years to save for a 15 per cent deposit on their first home[ii]. However, in Glasgow a first-time buyer saving 10[iii] per cent of their salary a month (£243), would have to save for just over six years[iv].

Saving for a deposit in Liverpool would take six years and five months, while in Newcastle-upon-Tyne will mean saving for six years and eight months. Compared to London, based on average salary it would take 20 years to save for a first home based on a 15 per cent deposit.

However, this doesn’t take into consideration the free government funding available via a Lifetime ISA, which offers a bonus of 25 per cent on savings, up to £1,000 per year. For example, if someone saving in Glasgow saved their money into a Lifetime ISA, saving for a deposit would take five years, saving over 12 months.

Nici Audhlam-Gardiner, Managing Director of Lifetime ISAs at OneFamily comments,

“As these numbers demonstrate there are affordable places to buy in the UK, and the ratios between salary and average property price make buying a first home significantly more achievable. Those looking to get onto the property ladder in a shorter amount of time should invest into a Lifetime ISA and boost their savings. £4,000 can be saved each tax year and with a bonus of up to £1,000 from the government, as well as investment returns their home owning dreams can quickly be turned into reality.”

The Lifetime ISA replaces the Help to Buy ISA closing in November this year. For more information visit www.onefamily.com/lifetime-isa

[i] Mustard cost of living survey 2018
[ii] https://www.hamptons.co.uk/news-research/press-releases/june-26-2018/
[iii] Using the 50,20,30 rule for budgeting, 50% of income goes on living expenses and essentials, 30% for flexible spending and 20% on financial goals, half towards long-term saving such as retirement and half towards shorter-term saving goals such as buying a first home
[iv] 15 per cent deposit £18,375, by saving 10 percent of their salary each month (£243) it would take six years and three months to save the deposit for a home