Pandemic property price boom means only highest paid professions can afford to buy a home

Research by London lettings and estate agent, Benham and Reeves, has revealed that purchasing a property in the current market is certainly a tale of two halves, as only the best paid professions possess the purchasing power to go it alone based on current mortgage eligibility.

Benham and Reeves looked at the average base salary of eight different professions and their property purchasing power based on the average borrowing eligibility of 4.5 times their income.

They then looked at how this borrowing ability stacked up when compared to the £235,242 required to buy, based on the current average house price of £276,755, minus a 15% deposit of £41,513.

The research shows that just three of the eight professions analysed could borrow enough to afford the average UK home.

With the average solicitor taking home £80,435 a year, a loan at 4.5 times their income would allow them to borrow £361,958, meaning they could comfortably afford the average UK home once they’ve saved the required deposit.

With a doctor able to borrow £351,524 at 4.5 times their annual income and an airline pilot also able to borrow £323,298, both professions could also comfortably afford to purchase a property in current market conditions.

However, for the average engineer, accountant, police officer and teacher, the sum they would be able to borrow based on 4.5 times their income falls short of the average cost of a UK property, even after deducting a £41,513 deposit.

The good news is that many homebuyers aren’t forced to go it alone when looking to obtain their dreams of homeownership. Benham and Reeves looked at their eligibility again, based on a joint application incorporating the average UK salary of a second buyer (£31,447).

By adding this second set of financials to the equation, all professions were able to borrow the sums required to cover the cost of the average UK home less a 15% deposit.

Director of Benham and Reeves, Marc von Grundherr, commented:

“House prices have soared during the pandemic and the average UK property now costs nearly £30,000 more than it did just 12 months ago.

While mortgage affordability has remained fairly good despite a string of base rate increases by the Bank of England, there are still two considerable barriers to obtaining homeownership.

The first being a sizable deposit that sits at over £41,000 on the average property. The second being actual mortgage eligibility, which is very much based on a level of earnings that has failed to keep pace with the increasing cost of buying a property.

As a result, only the very best paid professions are likely to afford a home in current market conditions when looking to do so on their own.

Of course, for many, the financial aid of a significant other will help bolster their ability to buy and it’s also important to note that there are a range of mortgage products available designed to help boost your purchasing power.

So while it’s certainly very difficult at present, it’s important not to lose hope and to get the advice of a whole of market broker so you know exactly what options are available to you.”

Average salary data sourced from Salary Expert, the NHS and Gov.uk.
Average house price sourced from Gov.uk – UK House Price Index.
Average LTI sourced from Money Helper, Online Mortgage Advisor, Equifax and Which?