When it comes to buying a property, getting a property at the right price is essential. The affordability of housing, particularly for first time buyers, is an issue that appears in the news time and time again. People want easy access to the property ladder and the security and value that’s associated with it.

Houses in the North are more affordable

A recent government study has revealed an increasing regional affordability gap for prospective first-time buyers, following a clear north-south divide.Properties in the South West, East, South East and London are less affordable to first time buyers, compared to other English regions and Wales.

London house prices

Over the last 18 years, London house prices have spiralled further and further away from first time buyer average incomes. As you can see in the graph below, median gross annual earnings for full-time employees aged22 to 29 years have remained relatively unchanged.

House prices, on the other hand, have increased proportionately more than earnings in 17 of the last 18 years, which has contributed to the worsening of prospective first-time buyer housing affordability. As a result, many young and first time buyers have been priced out of the capital completely.

The Institute for Fiscal Studies says only a third of people with a 10% deposit could borrow enough to buy one of the cheapest homes in their area. The figure was 90% cent in 1996, claims the London Evening Standard.

What affects the price of houses?

There are many factors that can influence the price of properties generally and individual properties specifically. These factors range from interest rates and government spending, to even things like street names or wallpaper.

The financial climate

Interest rates

Interest rates have one of the biggest impacts on housing prices. Interest rates  can either increase or decrease the cost of mortgage capital and affect the value of a property. As such, interest rates are as important to buyers as they are to sellers.

When interest rates change, so do mortgage repayments. But with more than half of all borrowers on fixed rates, most of the time, small changes go unnoticed by most homeowners.

But the story doesn’t end there.

Mortgage rates are only one interest-related factor influencing property values. Interest rates also affect capital flows, the supply and demand for capital and investors’ required rates of return on investment. Interest rates drive property prices in a variety of ways.

Changes in bank lending rates can increase or decrease the amount of capital available to a bank. As a result, this has a knock-on effect on how much a bank can lend for a mortgage.

When capital is tight, banks lend less, meaning that your mortgage will either be higher, or your deposit will be.

If the bank is pushed for decent rates on return, mortgage repayments are usually higher. During weak periods of economic growth, interest rates tend not to increase in order to keep people borrowing and the economy ticking  over.

This keep mortgages relatively cheap. But, as inflation outpaces wage increases, the affordability of property continues to feel like a burden.


New home building has picked up with 217,000 homes coming on to the market in 2016-17, up 20% on the year before. But that only brings the total back to levels seen before the financial crash, and a long way short of the 300,000 target reinforced by the government in the recent 2018 Budget announcement.

Building more houses effectively floods the market with new stock, reducing prices as supply overtakes demand. The more houses available to people, the cheaper they are. In the UK, the problem with building houses is as much a question of space as much as cost.

This is part of the reason why London, which is effectively groaning at the seams with property, has very high house prices. While in the north, where there is more space for large new build projects, property prices are lower.

It’s all a question of supply versus demand.


The property tax on everyone’s lips at the moment is Stamp Duty. This land tax has recently been abolished for home buyers purchasing properties up to £300,000.

This effectively allows first time buyers to save up to £5,000 on the price of their home. While not affecting property prices directly, this has had a major impact on people’s ability to afford to buy a property.

The property

Location, location, location

A survey by Nationwide discovered that if you live close to public transport links, the value of your property can change.

Living 500 metres or less from a Glasgow rail station adds an average of £9,400 to property values; and in Manchester, living close to a Metrolink station is worth an extra £8,300.

In London, being within 500m of a Tube station can increase property values by 10.5%, but move 250m further down the road and that figure drops to 7.6%.

Bus stops right outside front doors or blocking views from windows aren’t seen as desirable. The same is true of railway tracks and train stations.

So being close is great… but not too close.

Street names

Research by Zoopla found Warrens are the priciest types of road – with houses fetching up to £607,267, more than double the national average. Streets are much cheaper, at an average of £184,722.

Houses in streets with rude names sell for less, too. This is usually due to embarrassment. Houses have to be really good or really cheap if you want people to live in Fanny Hands Lane, Ludford.

Street numbers

Another survey has found that on average, odd-numbered houses are worth £538 more than identical even-numbered properties. Number 13 is skipped in many streets and for good reason. Properties with number 13 sell for £6,500 less than neighbouring properties.


When it comes to valuation, amenities should be taken into consideration. This is because the “Waitrose effect” is real. A recent report from Lloyds Bank suggested an upscale supermarket can add 12% or £40,000 to the price of an average property.

Conversely, a  loud, anti-social pub nearby can have the opposite effect…

The neighbours

Believe it or not, there may be something to the phrase of good fences making good neighbours. It’s been estimated that 1 in 5 homeowners will encounter serious problems with neighbours, whether it’s arguments over noise and territory or just living next door to people with anti-social habits or behaviour.

Bad neighbours have been suggested to knock as much as £31,000 off the price of the average property. So, if you’re looking for a means to negotiate your offer, try and find out more about the neighbours, or find out about any complaints made to the council.

If you’re trying to sell your home, now might be the time to make a peace offering.


For properties located in dense city centres, the ability to park right outside gives your property an instant boost in value. A parking space could add as much as £50,000 in an expensive urban location, like London.

A question of taste

The existing look has an impact on a property’s value. Despite the fact that people can decorate it however they want when they move, bad taste can knock off 5 or even 10% off a house’s value.

This is why so many sellers present their properties in clean, neutral colours. Non-offensive decor and external landscaping allow potential buyers to visualise their own style on a property.

Tips for saving for a first time buyers

More and more first time buyers are putting down deposits of 10% on their mortgage. With an average property price of £237,794, this means that for the deposit alone, you have to save £23,000.

On average, first-time buyers spend between three and four years actively building up a deposit, but for many, the journey is much longer. 25% of first time buyers spend more than five years saving for their deposit.

So, how can you save up for your first property?

1. Make a plan

Rather than simply saying “I’m going to save £23,000 over the next two years”, put together a plan of how you’re going to do this. How much are you able to save each month? What financial instruments are you going to use to maximise your interest? Having a plan creates a road map to saving success and will allow you to track how far you’re getting on.

2. Reward successes

Set mile stones for saving and reward yourself for reaching them. Just like a New Year’s Resolution, the best way to stick to a commitment is to reward yourself when things go well. Saved £1,000? Congratulations! Go out for dinner and celebrate.

3. Forgive slips

It’s okay if you can’t save as much as you thought you would each month. Life happens and sometimes things get expensive. Being able to forgive yourself helps keep you motivated and will help remind you that you can do it. Don’t get despondent!

The best way to save up for your first property is to change your lifestyle. According to a Which? survey in 2017, 41% of aspiring buyers went out less often and a further 41% cut out non-essentials. 37% worked overtime or longer hours, while 22% moved in with family to save on rental payments.

For first time buyers looking to get on the property ladder, saving is essential, but where you choose to live has as much of an impact as what you want to live in. Be smart, do your research and soon you’ll be on your way to securing your first home.

Looking Ahead

According to UK Finance, 2017 overall saw 365,000 first-time buyers, the highest number since 2006. However, first time buyer mortgages and Buy to Let applications were starting to decline.

In December 2017, first time buyer mortgage applications were down 17.2% in the same month a year earlier. In the light of a subdued housing forecast for 2018, property value increases began to slow down, prompting a response from the Government.

The 2018 Budget outlined a number of changes to help people get onto the property ladder and help keep up momentum in the property market. These changes included first time buyers’ relief on shared equity homes up to £500,000, as well as more funds to build houses, which will increase housing stock.

Budget Announcement 2018

  • First-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers’ relief
  • £500m for the Housing Infrastructure Fund, designed to enable a further 650,000 homes to be built
  • Lettings relief limited to properties where the owner is in shared occupancy with the tenant
  • New partnerships with housing associations in England to deliver 13,000 homes
  • Guarantees of up to £1bn for smaller house-builders

First time buyers’ relief means that properties up to £300,000 are excempt from Stamp Duty, while properties up to £500,000 pay only 5% duty on the amount above £300,000.

On 29 October 2018, the relief was extended to first time buyers purchasing through approved shared ownership schemes who choose to pay Stamp Duty in stages.


Lots of people in the UK are worried about what Brexit will mean for housing prices. Uncertainty always has a negative effect on house prices, because it leads to a slower economy.

However, rather than destroying house prices, some think Brexit will lead to a boom, at least in London. A recent study from housing market forecaster JLL predicts that the average price of a new-build home in London Zones 1 and 2 is expected to jump 17.6%. This is largely thanks to a luxury home market. For the rest of the housing market and the country at large, things may be different.

According to the Financial Times, analysts at UBS said the housing market may also prove to be robust in the wake of Brexit. The government’s efforts to help first time buyers, such as through the Help to Buy scheme, has so far kept the housing market strong.

“[There are] no visible signs of distress in the financial system, hence we see no reason to expect any sharp reduction in mortgage lending,” they said.

Property prices don’t appear to be changing any time soon. As a result, the gap between household earning and property prices will likely not change either. Deposits alone are expensive alone and they don’t cover the costs of conveyancing, solicitors, moving etc.

Every failed property deal costs consumers on average £2,727, more than 10% of the average deposit. Using Gazeal, you can take the fastest route to exchange and secure your property deal to ensure that there are no nasty surprises.