More specifically, house prices rose by 2.4% year-on-year in July, according to the latest Nationwide House Price Index, while wage growth reached 5% over the same period.
The price of a typical home in the UK now stands at approximately 5.75 times the average income — significantly below the record high of 6.9 times recorded in 2022, and currently at its lowest level in over a decade.
“After deteriorating sharply in the aftermath of the pandemic, housing affordability is steadily improving,” said Robert Gardner, Chief Economist at Nationwide.
“Despite broader uncertainty in the global economy, the underlying conditions for prospective homebuyers in the UK remain supportive,” he added.
The interest rate on a typical five-year fixed-rate mortgage is currently around 4.3% for a borrower with a 25% deposit.
While this remains more than three times higher than the historic lows seen in the autumn of 2021, it is significantly lower than the peak of approximately 5.7% reached in late 2023.
Verona Frankish, CEO of Yopa, stated that improvements in mortgage affordability, along with the government’s new Mortgage Guarantee Scheme, should help ensure that buyer activity remains steady and that house prices continue to strengthen.
