More than half (51%) of two- and three-bed houses for sale in Britain are listed at a price a household on an average income can afford, an increase of 6% from last year when the figure was 45%, Zoopla reveals.

The latest data shows a household on an average combined income of £53,500 can now afford a home listed at up to £301,000.

This assumes a mortgage of 4.5 times their gross annual income and a 20% deposit.

However, while affordability is improving and buyers have more choice, more would-be movers remain cautious about moving.

Zoopla says average mortgage rates now exceed 5%, having started the year at just 4% and sales agreed are 9% lower than a year ago as uncertainty weighs on buyer confidence.

The biggest improvements over the last 12 months have been in southern and eastern regions where income growth, more homes listed for sale, and flat to falling house prices have brought more properties within reach of buyers.

The South West has recorded the greatest improvement for buyers, with the proportion of houses that are affordable rising by 10% to 47%, followed by the East of England by 9%.

Northern regions have seen smaller increases, largely because a greater proportion of houses were already more affordable.

In the South East, just 23% of two- and three-bed houses fall under the affordability threshold, while the average asking price stands at £375,000.

London remains the least affordable market by a considerable margin, with fewer than 100 two and three-bed houses priced below £301,000.

Zoopla executive director Richard Donnell says: “The number of two- and three-bedroom houses within reach of households on an average income has increased as incomes continue to rise faster than house prices. However, the impact is being offset by higher mortgage rates which are adding to the monthly costs of taking out a new mortgage.”

“The extra cost for buyers is greater in southern regions where house prices are higher and this affordability divide is seen across the country. More than two thirds of houses in northern England and Scotland are now affordable to the average household while this drops to less than a fifth in London and South East England.”

“We expect house prices to continue to rise more slowly than incomes which will continue to help improve the affordability of housing. A greater choice of homes for sale is supporting a buyers market and means that sellers are having to be more realistic on price. “