Fewer than a third of areas in England and Wales have average house prices of less than £200,000, as property prices soar across the country.
New data from estate agency Savills shows the percentage of electoral wards with average prices below £200,000 has dropped from 53% to just 29% in the last decade.
Here, Which? explains where first-time buyers can still find affordable properties and offers advice on choosing the right area to move to.
House price rises see buyers priced out
New research by Savills found that buyers in some parts of England are struggling to keep pace with ever-increasing house prices.
The estate agency analysed 8,071 electoral wards in England and Wales, and found that only 29% have average house prices below £200,000.
This figure is significant, as it is only slightly above the £196,000 average price paid by first-time buyers to get on to the property ladder, according to data from Nationwide.
At the other end of the price scale, the number of areas with average prices over £500,000 has increased significantly in the last decade. This trend has been led by rising prices in London, where 54% of wards have average prices above half-a-million pounds.
The graph below shows how the percentage of wards with house prices below £200,000 and above £500,000 has changed in the last 20 years.
How many areas near me have affordable properties?
By analysing the data at a regional level, we can get a better idea of how house prices vary around the country.
None of London’s 636 electoral wards have average prices below £200,000, and only one – Ilford Town – has an average of below £250,000.
It’s slim pickings in the South East of England, too, where only 2% of wards have prices below the threshold.
The chart below shows the percentage of wards in each region of England and Wales with average house prices below £200,000.
Where can I find a cheap property in my area?
Savills provided us with additional data which shows how many electoral wards in each local authority of England and Wales have house prices below £200,000.
These areas are listed in the interactive table below. Simply click the dropdown arrow at the top of the table to choose your region. Once you’ve done this, you’ll be able to see all the qualifying wards ordered by their average house price, as of September 2020.
If you want to find a specific local authority or electoral ward, you can type its name into the search bar.
N.b. As none of London’s 636 electoral wards have average prices below £200,000 who won’t find this option in the table.
How much of a problem are rising house prices?
House prices have been increasing at a rapid rate, with the latest data from the Land Registry showing a rise of 8.6% year-on-year.
This comes as buyers rush to get purchases over the line before the end of the stamp duty holiday, which allows buyers purchasing more expensive properties to save as much as £15,000 in tax.
When house prices rise, however, it’s cash-strapped first-time buyers who lose out.
Lucian Cook of Savills says: ‘[Rising house prices] don’t create issues for existing home owners and those looking to trade up the housing ladder, given both the amount of equity they have in their home and the low cost of debt on their mortgage.
‘They will however continue to present a significant barrier to prospective first-time buyers, unless the recently announced mortgage guarantee scheme or other initiatives unlock significantly more competitive mortgage finance for those struggling to raise a deposit.’
Will the mortgage guarantee help first-time buyers?
As mentioned above, the introduction of the new mortgage guarantee scheme is one of the ways the government hopes to unlock home ownership for first-time buyers.
The scheme, which launched last month, involves the government taking on some of the risk of offering 95% mortgages, which disappeared almost entirely during the first Covid-19 lockdown last Spring.
So far, the scheme has been successful in encouraging banks to relaunch low-deposit deals. As of last week, there were 78 95% deals on the market, compared to just five in March.
The scheme has provided a boost for first-time buyers, but mortgage rates are around 1% more expensive than before the pandemic, meaning the cost of borrowing is now significantly higher than it once was.
Are bigger mortgages the solution?
The mortgage guarantee scheme is likely to help more first-time buyers get a home loan, but it won’t necessarily help them keep pace with ever-rising property prices.
Unless house prices fall dramatically (which seems unlikely), buyers will either need bigger deposits or the ability to borrow more money.
When you take out a mortgage, you can usually borrow up to four-and-a-half times your income. The number of mortgages that can be offered at this level or above is regulated by the Bank of England, which keeps a close eye on mortgage lending.
Last month, Nationwide made headlines by allowing borrowers with a 10% deposit to borrow up to five-and-a-half times their income, potentially allowing a couple with combined earnings of £50,000 to borrow up to £275,000 rather than £225,000.
Boosting borrowing power may be an effective way of helping first-time buyers purchase a home, but it doesn’t solve the long-term issue of rising house prices.
The government has pledged to build more affordable housing and has relaunched the Help to Buy scheme with new price caps, but many first-time buyers are still finding their options are limited.
How to find the best place to buy a home
As we’ve shown, there are still plenty of areas where you can buy a home for less than £200,000 in England and Wales, but it’s vitally important to do your research on the best place to move before taking the leap.
When weighing up your options, think about your priorities. For example, does the town need to be within an easy commute of the city or within the catchment area of a great local school, or are you more interested in peace and quiet, and green space?
Our guide on finding the best place to live includes advice on comparing areas, as well as tips on how to spot an up-and-coming town.
Once you’ve found a suitable location, our advice on buying a house will walk you through the homebuying process, from arranging viewings to exchange and completion.
