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First-time buyers struggling to buy coastal homes as house prices outstrip pay

First-time buyers are struggling to buy coastal homes as salaries lag behind house price growth. Photo: Getty
First-time buyers are struggling to buy coastal homes as salaries lag behind house price growth. Photo: Getty

First-time buyers in the UK are struggling to purchase properties in coastal areas as strong house price growth has outpaced local salaries.

New analysis from Rightmove (RMV.L) found that areas by the coast have seen the biggest decline in first-time buyer affordability during the coronavirus pandemic.

The data, published on Wednesday, is based on an average solo first-time buyer, and assumes they have saved up a 10% deposit towards an average first-time buyer type property in their area (homes with two bedrooms or fewer).

It also adjusts the latest available local salary data from the Office for National Statistics up to May 2022, by using the average national earnings increase, to get a current picture of local affordability.

The numbers come days after ONS figures showed that, after accounting for inflation, UK workers' average pay fell by 4.1% in the second quarter – the biggest fall since records started in 2001.

The average first-time buyer type home across the UK is now 7.2 times the average salary, up from 6.9 times in 2019. The average 10% deposit for a first-time buyer home has risen by 17%, to £22,409.

Areas where first-time buyer affordability has declined. Image: Rightmove
Areas where first-time buyer affordability has declined. Image: Rightmove

Over half of the top 10 regions to see first-time buyer affordability decline are close to or by the coast, with Adur in West Sussex topping the list, according to Britain's biggest property portal.

The average asking price for a first-time buyer type home in Adur is now 11.6 times the average salary for the area, up from 8.7 times pre-pandemic.

Tim Bannister, data expert at Rightmove, said: "The current picture of how affordability has changed for new first-time buyers trying to take out a mortgage looks very different in different parts of Great Britain,"

"It’s much harder for first-time buyers in the areas where prices jumped considerably over the past few years, especially when you add in six consecutive interest rate rises and average local salaries not keeping pace."

"We’re still seeing the effects of the pandemic whereby prices for homes near the sea are at a premium, with house prices quickly outpacing local salaries.

"However, despite stretched affordability, we’re not currently seeing rising prices and interest rates having a significant impact on first-time buyers wanting to move."

Read more: UK property sales jump to pre-COVID levels in busiest July since 2015

Rising asking prices and interest rates means that the average monthly mortgage payment for new first-time buyers putting down a 10% deposit is now £1,032, Rightmove said. That is 39% up on the same time in 2019.

Despite affordability being stretched for many, enquiries for first-time buyer type properties are significantly up on the more normal market of 2019.

Meanwhile, demand for first-time buyer type homes jumped 32% on 2019, although it has dropped by 9% compared to the frenzied market of 2021.

Analysts warn that affordability is a "long-standing barrier" for first time buyers looking at homeownership.

Kate Eales, head of regional agency at Strutt & Parker, said: "There are several factors at play here. Across the country, the pipeline of new properties coming to the market for sale has not kept up with demand, and there is also a lack of suitable housing coming through for first-time buyers.

"A decade of mostly upward rents has put further pressure on saving for a deposit, and a rising market means that the goalposts have kept moving. All this has been exacerbated in recent months with rising interest rates, making mortgages more expensive, while inflation is driving down real income."

The majority of areas to see a slight improvement in affordability during the health crisis were in London or in traditional commuter areas, as local salaries increased at a faster pace than house prices.

Watch: Will UK house prices ever fall?