House Price-to-Income Ratio & Affordability Calculator

House Affordability Guide

UK House Price-to-Income History

The UK house price-to-income ratio measures how many years of gross salary a property costs. UK national average: approximately 8-9× (2024). London: 13-14×. South East: 10-11×. North East and Scotland: 5-6×. Historical context: in 1990, the UK average was approximately 3-4×. In 1997 (before the boom): approximately 3.5×. After the 2004-2007 boom, ratios reached 6-7×. Post-2012 recovery: ratios climbed steadily to current highs. The Bank of England limits most mortgages to 4.5× income — meaning a

Mortgage Affordability Rules

Standard mortgage limit: most lenders cap at 4.5× combined gross income. Some professional mortgages (doctors, lawyers, accountants): up to 5-5.5×. First-time buyers: most lenders require 5-10% minimum deposit. Below 10% deposit: limited lenders, higher rates (mortgage guarantee scheme may help). Stress test: lenders check that you could still afford payments if rates rose by 3%. This effectively limits maximum borrowing to approximately what you could afford at 3% above the current rate. Deposi

Regional Affordability

The affordability crisis varies enormously by region. Average first-time buyer deposit requirement (2024): London: £125,000+. South East: £70,000+. North West: £25,000-35,000. North East: £20,000-25,000. Average age of first-time buyer: London ~35 years. National average ~33 years (up from ~29 in 2000). Shared ownership: purchasing 25-75% of a property and paying rent on the remainder. Useful in high-cost areas but complex exit strategies. Right to Buy: council tenants can purchase at discount.

Should You Buy or Rent?

Buying advantages: builds equity (capital appreciation), stable monthly payment (fixed rate mortgage), freedom to decorate and renovate, hedge against rent inflation. Renting advantages: flexibility to move, no maintenance costs, capital available for other investments, better option if staying < 3-5 years (transaction costs — stamp duty, solicitor, survey — average £10,000-15,000). Break-even analysis: most financial models suggest buying becomes cheaper than renting after 5-7 years in the UK,