Affordability in the UK housing market has shown gradual improvement over the past year, offering cautious optimism for prospective buyers - particularly first-time buyers, according to the latest analysis from Nationwide.
Easing affordability pressures, stronger earnings growth, and falling mortgage rates are all beginning to support stronger buyer demand.
First-time buyers benefit from easing conditions
One of the most notable developments has been the rise in first-time buyer activity. With house price growth remaining below earnings growth and mortgage rates continuing their steady decline, more buyers are finding it easier to enter the market. The share of first-time buyers is now above the long-term average, helped by easier access to credit.
High LTV mortgages, requiring deposits of 15% or less, have reached their highest share in over a decade. Overall, first-time buyer activity over the past year was around 20% higher than 2024 levels, underlining the impact of improved affordability.
Nationwide’s main affordability benchmark suggests that a typical first-time buyer earning the average UK income and purchasing with a 20% deposit would spend around 32% of their take-home pay on mortgage repayments. While this remains slightly above the long-run average of 30%, it is a significant improvement compared with the 48% recorded during the affordability crisis of 1989.
Deposits remain a major barrier
Despite these improvements, saving for a deposit remains a major challenge. The average 10% deposit for a typical UK first-time buyer property is now around £23,000. Even saving 10% of average net income - approximately £320 per month - it would take close to six years to build this amount.
The challenge is even greater in certain regions. In London, a 10% deposit is more than three times higher than in the North of England. As a result, a buyer in the capital could need around nine years to save for a deposit, compared with about four years for someone purchasing in northern regions.
Unsurprisingly, many buyers continue to rely on family support. In 2024/25, over a third of first-time buyers received help with their deposit, whether through gifts, loans, or inheritance.
Affordability varies widely by occupation
Affordability also differs sharply depending on profession. Those working in managerial and professional roles benefit from higher average earnings, meaning mortgage payments take up a smaller share of their income. By contrast, affordability is most stretched for people in sales, customer service, and so-called 'elementary occupations' such as cleaners, labourers, and couriers. In these groups, typical mortgage costs can consume around 50% of take-home pay.
Encouragingly, all occupational groups have seen some improvement in affordability since 2024. The biggest gains have been among workers in caring, leisure, and other service roles, driven by stronger earnings growth in these sectors. However, the gap between high and low-earning professions remains significant, reflecting wider income inequality across the UK.
Regional differences remain stark
Housing affordability also varies considerably across regions. Over the past year, most parts of the UK have seen continued improvement in affordability when measured by mortgage costs as a share of income. The exception is Northern Ireland, where strong house price growth has slightly worsened affordability, pushing costs above the region’s long-run average.
London, despite seeing one of the largest improvements for the second year running, remains the least affordable region by a wide margin. House price growth in the capital has been relatively weak, while earnings have risen and interest rates have fallen, but affordability pressures are still intense. In contrast, regions such as the North, Yorkshire & The Humber, and Scotland now have mortgage payment ratios slightly below their long-term averages.
House price-to-earnings ratios highlight these disparities further. London continues to record the highest ratio at 7.5, while Scotland has the lowest at 2.9, indicating far more accessible housing in parts of the country.
A growing divide between aspiration and reality
These regional differences are contributing to a growing divide between those who want to buy and those who realistically can. In London, the average income of actual first-time buyers is around 45% higher than the regional average, suggesting that only higher earners are able to step onto the ladder. In regions with stronger affordability, such as the Midlands, first-time buyer incomes are much closer to the local average. In Scotland, they are even slightly below average, pointing to a comparatively healthy market.
Andrew Harvey, Nationwide’s senior economist, said: “With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat over the past year, helping to underpin buyer demand.
“Indeed, the first-time buyer share of house purchase activity was above the long run average, supported by easier credit availability, with the share of high loan-to-value lending (i.e. with a deposit of 15% or less) reaching its highest level for over a decade. First-time buyer activity over the last year was around 20% higher than 2024 levels.
“Our main affordability benchmark shows that a prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 32% of their take-home pay – slightly above the long-run average of 30% and well below the recent high of 48% recorded in 1989."
