News research shows first-time buyers in Preston now have to borrow 3.64 times their salary

Mojo Mortgages has created a list of the least affordable locations to get on the property ladder

By Aimee Seddon
Thursday, 17th February 2022, 4:55 am

New research by a mortgage broker firm has found that first-time buyers in Preston now need to borrow more than three-and-a-half times their salary to get on the property ladder.

The figures, compiled by online mortgage broker Mojo Mortgages, analysed salary data from the Office of National Statistics and January 2022 property valuation data from Zoopla to establish the average income multiple required by a couple to buy a property across 100 locations.

Overall, Preston ranks in 57th position in the list of 100 of the country’s least affordable locations.

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Preston first time buyers now have to borrow 3.64 times their salary to get on the property ladder. Image: natik_1123 on Pixabay.

With house prices in Preston commanding an average price tag of £216,744 and local residents typically earning £25,310 a year, a couple that had saved a 15 per cent deposit would have to borrow 3.64 times their salary for a mid-market home.

To calculate this figure, Mojo Mortgages used the average annual salary in Preston to find the combined average salary of a couple, and compared this to Preston's average house price and average deposit (based on 15%), to find the income multiple required to afford this.

As this list was based on first-time buying couples, this 3.64 times figure would therefore be much higher if buying alone.

Richard Hayes, CEO and co-founder at Mojo Mortgages said: “First-time buyers could now borrow as much as seven times their salary – but this would be a big stretch for many couples who would struggle to buy a property in Preston and would be even higher for those thinking about buying on their own.

“Lack of affordable housing has repercussions, not only for the individuals involved but the wider economy and community if workers in lower-paid jobs are priced out of the market.

“Enabling people to borrow more might help them onto the property ladder but much will depend on their circumstances as lenders and brokers must apply strict affordability checks. It’s also important that buyers weigh up whether the location offers the best quality of life for them.”

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Their findings come as recent reports suggest that house prices are rising at their fastest pace in 17 years, with Mojo Mortgages explaining that whilst government incentives, including the stamp duty holiday and First Homes scheme, have helped to fuel sales, pent-up demand has also caused prices to rocket.

Overall the research found that 30 towns and cities in the UK were above the traditional 4.5 salary multiplier applied to borrowers.

The top 20 most expensive towns and cities are all in or around the South of England, apart from Stratford-upon-Avon in 18th.

The most expensive place to get on the property ladder is Bath where first-time buyers, earning an average salary of £29,940, have to borrow 7.5 times their salary for a £528,530 property (the average for the city), followed by Oxford on 7.29 and London on 7.13.

At the other end of the spectrum, some of the best bargains to be found are in the North of England and Scotland, with the top ten most affordable areas being Glasgow, Doncaster, Wigan, Durham, Darlington, Blackpool and Barnsley.

In nearby Blackpool, the average couple with a combined salary of £45,134.00 have to borrow 2.63 times their salary to afford the average £139,752.00 house.

You can read the full research here.