Despite house prices falling over the past year, higher mortgage rates will be pricing many buyers out of the types of homes and areas they want to live in.
One in four movers went to a more affordable area this year, according to the estate agent Hamptons International, up from one in five in 2022.
Aneisha Beveridge, head of research at Hamptons International said: ‘Households are slowly but surely adapting to higher rates.
‘While movers continue to be spurred on by the three D’s – debt, divorce and death – first-time buyers have gone against the odds and purchased a record 28 per cent of homes across Great Britain this year.
‘But with higher mortgage rates limiting how much they can borrow, many are adapting by purchasing smaller homes in more affordable locations.’
Move somewhere cheaper: One in four households moved to a more affordable area this year, up from one in five in 2022, according to Hamptons
None will be more impacted by higher mortgage rates than first-time buyers.
Mortgage costs have increased by 25 per cent for first-time buyers over the last year alone, according to research by Halifax, from an average payment of £1,095 per month up to £1,364, as a result of higher interest rates.
However, the impact of higher interest rates isn’t felt equally across the country. It will depend somewhat on the average house price and earnings in each given area.
The cost of a typical UK home is now 6.7 times average earnings, according to Halifax – but this varies considerably depending on where you live.
The cheapest local area to live in the UK is Inverclyde in Scotland, where average house prices are only 2.9 times higher than average annual earnings.
The most expensive local area to live in is either Westminster or the City of London where house prices are a staggering 16 times the average annual income in each area.
According to Halifax’s data, the average house price in London’s two most expensive areas is £915,000 – almost seven times more expensive than the average £134,000 house price of Inverclyde.
Swap the City of London for Inverclyde? Average house prices in the London local authority are almost seven times more expensive than Scotland’s cheapest local authority
While many people won’t necessarily be prepared to move from one end of the country to another in order to find cheaper housing, some may be prepared to move somewhere closer to home.
Halifax has provided This is Money with a breakdown of the most expensive and cheapest local authorities in each region, to show where buyers could look for something more affordable.
Although it won’t necessarily make sense for the majority of homebuyers to pick between the most expensive and cheapest locations in a given region, it does at least show how different local areas can be when it comes to housing affordability – and some are geographically quite close to one another.
For example, in the North West, Blackpool and Trafford, in Greater Manchester, are only 49 miles apart by road.
And yet Blackpool house prices (£134,000) are 3.4 times annual earnings compared to Trafford’s (£330,000) 8.5 times house price to earnings ratio.
Swap Trafford for Blackpool: Average house prices are £134k in Blackpool compared to Trafford’s £330k. The two areas are just 49 miles apart
Darren Sellwood, senior branch manager at estate agent Entwistle Green in Blackpool, argues that other than being a great place to live, Blackpool offers excellent potential for both buy-to-let investors seeking rental income and long-term house price growth.
He says: ‘If I was looking to invest in a property to live in or as an income driver, I’d look no further than Blackpool – a vibrant coastal town with affordable property options and a booming tourism industry.
‘It has iconic attractions, beautiful beaches, and substantial ongoing development projects – with millions of private and public money being invested.
‘This includes the Talbot Gateway Project, the relocation of 3,500 DWP workers to Blackpool Town Centre and new planned Multiversity training centre.’
Another coastal location offering the best value for money in its region is the city of Portsmouth, where average house prices are 5.2 times annual earnings.
Just 60 miles northeast of Portsmouth is Mole Valley in south Surrey, where house prices are typically 13.2 times more expensive than earnings.
Move to Portsmouth: The city has good transport links, including buses, ferries, trains and coaches and an array of different era properties, according to one local agent
Gemma Atkin, senior branch manager at estate agent, Fox & Sons in Portsmouth, says: ‘The sunny side city of Portsmouth with the beach and the sea on our doorstep, offers easy access into other main cities such as London and Bournemouth, without needing to pay the high house prices like in these areas.
‘We have an array of different era properties, being in such a rich historical city, which appeals to everyone.
‘With good transport links, including buses, ferries, trains and coaches, your chosen lifestyle – city or rural – is at your fingertips.’
| Region | Most and least expensive | Average house price comparison | Distance by road | |
|---|---|---|---|---|
| Eastern England | St Albans vs South Holland | £564k vs £205k | 83 miles | |
| East Midlands | Harborough vs Mansfield | £323k vs £179k | 59 miles | |
| Greater London | City of London vs Barking | £915k vs £310k | 8 miles | |
| North East | Northumberland vs South Tyneside | £202k v £143k | 38 miles | |
| North West | Trafford vs Blackpool | £330k vs £134k | 49 miles | |
| Scotland | East Renfrewshire vs Inverclyde | £274k vs £134k | 34 miles | |
| South East | Mole Valley vs Portsmouth | £571k vs £224k | 60 miles | |
| South West | Bath vs Plymouth | £361k vs £185k | 121 miles | |
| Wales | Monmouthshire vs Neath/Port Talbot | £307k vs £139k | 81 miles | |
| West Midlands | Cotswolds vs Stoke-On-Trent | £411k vs £143k | 95 miles | |
| Yorkshire and Humberside | Harrogate vs Hull | £347k vs £120k | 69 miles | |
| Credit: Halifax |
In London, one of the most expensive local authorities is the City of London, where house prices are 16 times more than average incomes in the area.
Eight miles east of the City of London is the cheapest London local authority, Barking and Dagenham, where house prices are 5.4 times average incomes.
Estate agents from Barking and Dagenham were keen to point out that both areas should appeal to people wanting to live and work in London.
Jeff Vedgen, branch manager at estate agent, William H Brown, in Barking said: ‘Barking is an up-and-coming cosmopolitan area of London. It is now regarded as the new jewel of the East End.
‘Barking’s new “settlers” have been drawn in by its dynamic and vibrant feel and to its fantastic transport links into the City and West End.
‘Along with its established networks it now boasts an Uber boat link which makes it a perfect place to set up home.’
Lee Clark, senior valuations manager at Bairstow Eves in Dagenham adds: ‘Dagenham has fantastic transport links. It has three district line stations providing direct access for commuters into London, as well as close access to the A13 and M25.
‘The borough further benefits from various parks, as well as Beam Country Park for homeowners to enjoy open green space in an area of London that is still very affordable.’
Move to Dagenham? The town has fantastic transport links, with three district line stations providing direct access for commuters into London, according to one local agent
Someone living and working in the West Midlands could potentially choose between the Cotswolds, where house prices are 11.1 times average incomes, and Stoke-on-Trent where prices are only 3.9 times the typical annual income.
Meanwhile, those looking to get on the property ladder in Yorkshire and Humberside could consider Hull over Harrogate given they are just 69 miles apart.
Hull is the cheapest local authority in the region with average house prices worth 3.3 times the average income in the area.
Meanwhile, Harrogate is the most expensive place to buy in the region, with house prices 9.6 times higher than the average annual income.
While moving to a different area has become easier for many thanks to hybrid working, that is not the case for everyone.
Henry Pryor, a professional buying agent and property expert, believes that he expects increasing numbers of first-time buyers and home movers to compromise on location given higher mortgage costs.
He says: ‘For the past 100 years people have moved to places that they can afford. They have compromised.
‘With the increase in working from home, many people can afford to live further from work and for those fortunate to be able to do so, this is a huge luxury.
‘For those who can’t work from home – the nurses, the teachers, the fireman or the factory worker – this is not an option.
‘They would have to change jobs to be able to move somewhere more affordable – Something that more and more people are having to consider.’
