Money blog: Incredible fried chicken, the ‘perfect’ brunch and a Michelin toastie: Eight cheap recipes from UK’s best chefs | Money News

Housing affordability has seen a “modest improvement” in the last year – but people are still spending more of their take-home pay on mortgage payments than in previous decades, a building society has found. 

Research by Nationwide found earnings growth had slightly outpaced house price increases in the last year, and combined with a slight reduction in average borrowing costs, it had become more affordable to get on the property ladder.

However, by longer-term standards, affordability continues to be “stretched” with first-time buyers with a 20% deposit spending around 36% of their take-home pay on mortgage payments. 

That’s well above the long-running average of 30%. 

Andrew Harvey, a senior economist at Nationwide Building Society, said the “deposit hurdle remains high”, with the challenge of saving made worse by record rent rises in recent years. 

In 2023-24, around 40% of first-time buyers had some help raising a deposit, either in the form of a gift or loan from family or friends, or through an inheritance, the report said.

Mr Harvey added: “Despite these affordability challenges, mortgage market activity and house prices proved surprisingly resilient in 2024.

“Annual house price growth ended the year at 4.7%, a marked improvement from the small declines seen at the start of 2024.

“The number of mortgage approvals returned to 2019 levels, despite typical mortgage rates being around three times higher. Perhaps even more remarkably, first-time buyers’ share of house purchase mortgages was actually higher in 2024 (54%) than it was pre-pandemic (51%).” 

“Looking ahead, providing the economy recovers steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”

Nationwide also looked at the most and least affordable local authorities across the UK. 

Kensington and Chelsea in London was found to be the least affordable with a house price-to-earnings ratio of 13.6. 

This means the average house price is 13.6 times higher than the average annual income for someone living there. 

The ratio is often used to measure how expensive housing is relative to what people earn. 

Here are the least affordable authorities per nation or region: 

The most affordable place to buy a property was found to be Aberdeen in Scotland, where the house price-to-earnings ratio came in at 2.5. 

This was followed by Burnley in the North West, with a 2.8 ratio.