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First-time borrowers struggle as price rises outstrip income

The ratio of house price to income has shot up by 60 per cent from 1970 to this year, with London, East Anglia and the South-west having the highest ratios.

Research from Alliance Trust found that Scotland and North England have the lowest ratios while London is the least affordable region for first-time buyers, with house prices 4.4 times income compared with 2.6 times income in 1970.

Over the 35-year period, house prices have risen the highest at 3,432 per cent followed by the South-west with a rise of 3,427 per cent.

London is the worst place for first-time buyers, with house prices 4.4 times average income, versus 2.6 times in 1970. The South-east has increased from 2.7 times to 4.3 times 35 years ago, making it the second least affordable place to live.

Head of Alliance Trust Research Centre Shona Dobbie says: “These figures clearly show that it is becoming harder for first-time buyers to break into the housing market. In recent years, buy-to-let investors have taken on the traditional role of first-time buyers in keeping the market going but you really need FTBs to sustain prices over the longer term.

“There are knock-on effects from the pressure on first-time buyers such as the time now needed to build up a bigger deposit. With so much time now being spent focusing on saving for a house and paying it off, people are putting off retirement saving for even longer.”


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