Housing affordability improved “significantly” this year on the back of property price falls according to Britain’s biggest mortgage lender.
The house price to earnings ratio, a key measure of affordability, dropped to 4.56 in November, following house price falls of more than 16 per cent during the previous 12 months.
This was the lowest level for the ratio for more than five years and well down on the peak of 5.84 reached in July last year, according to Halifax.
It also helped to bring the ratio closer to its long-term average of four, the group said.
The fall in house prices helped to treble the number of local authorities where the average first-time buyer home is affordable for a single person on average earnings, from just four per cent in 2007 to 14 per cent now.
The level of affordability for people buying their first home also improved in seven of the UK’s 12 regions during the year.
Scotland saw one of the biggest rises in affordability, with 67 per cent of local authorities there now affordable for a single first-time buyer on average earnings, up from 30 per cent the previous year.
There was also a big increase in local authorities that were affordable for first-time buyers in Yorkshire and the Humber, rising from none in 2007 to 40 per cent at the end of this year.
But despite the steep house price falls seen during the past 18 months, there was no increase in the number of areas that were affordable in London, the South West, West Midlands, Wales and Northern Ireland, where the typical property bought by a first-time buyer remains unaffordable for someone on average earnings in all local authorities.
Martin Ellis, Halifax chief economist, said: “There has been a marked improvement in housing affordability in many parts of the UK.
“First-time buyers, in particular, are benefiting, especially outside the south of England and the Midlands. We expect this trend to continue in 2009.”