The housing market in 2024 offered glimmers of hope for prospective buyers, with Nationwide Building Society’s latest Housing Affordability Report highlighting slight improvements in affordability. However, unfortunately beneath these modest gains lies a sobering reality: housing remains historically unaffordable for many across the UK. In this article I will run through the latest Nationwide Housing Affordability report and give my thoughts and insights on the worrying data presented by the UK’s largest building society.
Nationwide Housing Affordability In 2024
While earnings growth in the UK slightly outpaced house price increases and borrowing costs eased, the typical first-time buyer still faced steep financial hurdles. According to Nationwide’s report, first-time buyers spent an eye-watering 36% of their take-home pay on mortgage payments in 2024, significantly above the long-term average of 30%. How long will it be before this rises to 50%? Sadly, I think that this will happen much sooner than we anticipate.
The Harsh Reality of Homeownership in 2024
Despite minor improvements, the house price-to-earnings ratio (HPER) for first-time buyers remained alarmingly high at 5.0, far above the long-run average of 3.9. This figure really points out the unacceptable property affordability crisis in the UK housing market, where high property prices continue to dwarf wage growth in many regions.
As predicted, London topped the unaffordability charts, with a staggering HPER of 8.0. In Kensington and Chelsea, this figure soared to an eye-watering 13.6—making homeownership a pipe dream for all but the wealthiest buyers. By contrast, Scotland emerged as the most affordable region, with an HPER of just 3.0, and Aberdeen proved to be the most accessible city for first-time buyers, boasting a HPER of 2.5.
Reading these figures meant that I couldn’t help but think of my own parent’s and how fortunate they were with property. By the time I was born, my father was 31 and my mother was 29. They were already on their second home (a three bed detached property in the midlands) after buying their first home 5 or 6 years earlier. Now, at the age of nearly 30 and living in London, the prospect of getting onto the property ladder is becoming more and more of a pipe dream for me. Something that I am sure is felt by thousands of other young professionals living in the capital.
Borrowing Costs Ease, but Saving Remains a Struggle
One silver lining in 2024 was the decline in borrowing costs, offering some respite for buyers grappling with high house prices. However, the cost-of-living crisis and soaring rents continued to erode people’s ability to save for a deposit. Nationwide’s data reveals that around 40% of first-time buyers in 2024 relied on financial assistance from family or friends, illustrating the growing importance of the so-called “Bank of Mum and Dad” in facilitating homeownership.
While financial help from loved ones can provide a lifeline, it also encourages inequalities in many cases. Those without access to family support are increasingly locked out of the housing market, forced to rent indefinitely or compromise on location and property size. Whereas those who are fortunate enough to receive large financial gifts from family towards buying a property are in a much better position. Don’t get me wrong, if you want to gift family money and help them out, you are completely entitled to. But the disparity between the two types of first-time buyers should definitely be noted.
First-Time Buyers Carry the Market
Interestingly, according to the report, first-time buyers remained a key driver of the market, accounting for 54% of house purchase mortgages in 2024, up from 51% before the pandemic. This trend suggests that despite the challenges, many are still determined to get on the property ladder. However, their resolve often comes at a high personal cost, with sacrifices in lifestyle, location, or financial security.
Speak To a Mortgage Advisor in 2025
For first-time buyers, the dream of homeownership remains alive but increasingly out of reach without substantial support. As we move into 2025, bold action and innovative policies are desperately needed to make housing genuinely affordable for everyone, not just the fortunate few. Hopefully the new government will keep to their housing promises, and mortgage lenders will start offering more support for struggling mortgage borrowers. One thing I can say for certain is that we at Oportfolio Mortgages will be here, ready to help anyone who needs some help and guidance around their mortgage affordability. Give our mortgage advisors a call or drop us a message today to see how we can help.