By comparing rental and house-buying affordability, researchers at Bird & Co have created an Affordability Index to ascertain which Local Authorities in England and Wales offer the most affordable home-purchasing options for first-time buyers.
Buying a house in England and Wales involves many costs beyond the initial deposit and monthly mortgage payments. Upfront expenses such as conveyancer fees, Stamp Duty, and surveys can add up quickly, making homeownership a significant financial commitment.
Meanwhile, renting offers a straightforward monthly payment, but one that cannot be retrieved once paid. Despite the higher upfront costs of buying, many first-time buyers are eager to step onto the property ladder and secure their financial future.
However, affordability remains a major challenge. That’s why Bird & Co have created their own Affordability Index, designed to highlight the areas in England and Wales where buying a home is most and least affordable.
In this article, we’ll break down the rankings, explore key affordability trends, and examine the factors contributing to regional differences.
Bird & Co’s House Buying vs. Renting Affordability Index
The Affordability Index looked at datasets from ONS, GOV.uk, Statista, Home Owners Alliance and UKMC to compare renting and buying costs across Local Authorities in England and Wales. We calculated:
- Rental Affordability Score (RAS): Monthly rent as a proportion of salary.
- Home Purchase Affordability Score (HPAS): Upfront and ongoing home-buying costs relative to income.
By dividing HPAS by RAS, an Affordability Index was found for each location, allowing us to ascertain where renting or buying is the better financial choice.
The Index values for all locations indicated that renting is the more viable option across England and Wales. However, from these Index values, we could ascertain the top and bottom 10 most affordable locations for first-time buyers (i.e. the Local Authorities with the lowest affordable Index values are the most affordable for first-time buyers).
Why the Affordability Index Differs from Rent Minus Mortgage Payments
During our investigation, we calculated the difference between monthly rent and mortgage payments. In 246 out of the 316 Local Authorities studied, mortgage payments were lower than rent.
This would indicate, therefore, that mortgage payments are largely more affordable across England and Wales.
However, when we then took into account the initial house-buying fees (calculated by summing deposit values, Stamp Duty, conveyancing fees, and house survey costs) and formulated the Affordability Index, rent was revealed as being more affordable in every location.
10 Locations Where Home-Buying is Most Affordable
The Affordability Index revealed that rent was the more affordable option in every location. However, from the Index, researchers could also determine in which areas home-buying is the most and least affordable compared to renting, on average, for first-time buyers.
The 10 locations in which buying a home is most affordable are:
- Newcastle upon Tyne
- City of Bristol
- Portsmouth
- Manchester
- Leeds
- Southwark
- Southampton
- Burnley
- Lincoln
- Bournemouth, Christchurch and Poole
Examining these trends, some potential reasons behind these figures could include:
Large Cities with Thriving Economies and Abundant Job Opportunities
Surprisingly, many of the Local Authorities in this list are large cities, which we might expect to be less affordable for first-time buyers. High job availability and a bustling social scene make these areas desirable, driving up demand and, consequently, property prices.
Yet, our Affordability Index tells a different story. It is feasible that the strong local economies and employment opportunities in large cities such as Newcastle, Manchester, Leeds, and Bristol offer a balance of affordability and job availability, making them attractive yet accessible for buyers.
In fact, in Newcastle, average house prices stand at a reasonable £170,048, with mortgage repayments at around £622 per month. In comparison, renting is significantly more expensive, averaging £989 monthly. As a result, buying may be the more attractive option.
Low Property Prices
Similarly, cities like Burnley and Lincoln have relatively lower property prices, making homeownership more accessible for first-time buyers. The average price for first-time buyers is £102,251 in Burnley and £161,201 in Lincoln.
High Salaries
On the other hand, Southwark has notably higher house prices, averaging £424,335, with mortgage repayments around £1,552. However, the area's average salary of £3,549 per month—the highest among the locations analysed—could help offset these costs.
Furthermore, with rent averaging £2,238 per month, homeownership may still be the more cost-effective option in the long run.
Reasonable Mortgage Repayments
While demand is rising in places like Bournemouth, mortgage repayments haven't yet reached the extremes seen in London and the South East, keeping them within reach for first-time buyers. Our research showed that, on average, buyers are paying £924 per month here.
The Assistance of Government Schemes for First-Time Buyers
First-time buyer schemes and government support may also have aided buyers in these areas in purchasing their first homes.
An example of this is the Lifetime ISA, a government savings scheme designed to help first-time buyers save for a house deposit, which came into effect on April 6, 2017. The details of this scheme are as follows:
- Account holders can deposit up to £4,000 per year until the age of 50, to which the government provides a 25% bonus.
- The property must be a first home.
- The property must cost £450,000 or under.
This grant applies to all the areas listed in the table, as the average property prices in these local authorities do not exceed the price limit.
10 Locations Where Home-Buying is Least Affordable
The 10 locations in which buying a home is deemed the least affordable for first-time buyers compared to renting are:
- Powys
- Derbyshire Dales
- Kensington and Chelsea
- Ceredigion
- Pembrokeshire
- Rutland
- Westminster
- South Hams
- Waltham Forest
- Richmond upon Thames
Examining these trends, some potential reasons behind these figures could include:
Elevated House Prices and Mortgage Repayments in Affluent Areas
It is rather unsurprising that areas such as Kensington and Chelsea, Westminster, Richmond upon Thames, and Waltham Forest are deemed some of the most unaffordable for first-time buyers. They are located in or near London, where house prices are among the highest in the UK, making it difficult for first-time buyers to get on the property ladder.
Our research revealed that house prices in Kensington and Chelsea average a staggering £1,067,547, with mortgage repayments reaching £3,905 per month.
Similarly, Westminster's house prices are, on average, £911,835, with mortgage repayments averaging £3,335 per month. These figures place homeownership far out of reach for most first-time buyers. Instead, property here is likely often bought by investors and high-net-worth individuals.
Affordability is Lower in Desirable Rural Locations
Furthermore, it is reasonable to assume that the scenic beauty of Derbyshire Dales, South Hams, Pembrokeshire, Ceredigion, and Powys attracts second-home buyers and retirees, pushing up property prices beyond what local salaries can afford.
Low Salaries in Rural Areas
Additionally, rural areas such as Powys, Ceredigion, and Pembrokeshire often have lower average wages compared to urban centres, making it harder for residents to afford a home, despite seemingly lower house prices compared to London.
Low Housing Availability and High Mortgages in Rural Localities
Moreover, places like Rutland and South Hams have relatively low housing availability and, with high demand from both local and external buyers, this competition could be expected to drive prices higher.
Our research also found that the average rent in Rutland is £845 per month, compared to mortgage repayments of £1,053, while in South Hams, rent averages £930, with mortgage repayments reaching £1,124. With homeownership costs exceeding rental prices, buying in these areas is far less attainable for first-time buyers, making renting the more viable option.
Tourism Drives Housing Demand
Finally, we could assume that tourism impacts the affordability of certain areas. Coastal and rural regions like Pembrokeshire, Ceredigion, and South Hams are popular holiday destinations, leading to an increase in second-home ownership and holiday lets, reducing the availability of affordable housing for first-time buyers.
Key Takeaways for First-Time Buyers
While renting remains the more affordable short-term option across England and Wales, our Affordability Index highlights key locations where first-time buyers have a better chance of stepping onto the property ladder.
Large cities with strong economies, reasonable mortgage repayments, and government support schemes provide opportunities for homeownership, while high property prices and low local salaries make certain rural and London areas less accessible.
Buying a Home in 2025?
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If you are a first-time buyer and are interested in exploring government home buyer incentives, click here to learn more. Alternatively, check out our first-time buyer home deposit calculator to see how close you are to buying your first home.
Methodology and Data Sources
To assess rental affordability, we used two datasets from the Office for National Statistics (ONS) to compare rental prices with salaries.
For house-buying affordability, we relied on the UK House Price Index (October 2024) from the official government website, specifically extracting data relevant to first-time buyers. We then compared this with salary data for all individuals.
Mortgage calculations were based on loan-to-value percentages and interest rates obtained from Statista. We also researched the average mortgage repayment period for first-time buyers to determine estimated monthly repayments.
In addition to property prices, we factored in initial house-buying costs, including deposit, Stamp Duty, conveyancing fees, and house survey costs. For house survey prices, we sourced data from the HomeOwners Alliance, using a table outlining costs for three survey levels. We then took the median value across all levels for each house price as our estimate.
Finally, we developed an Affordability Index to compare the cost of renting versus buying in different locations. We first calculated two separate affordability scores:
- Rental Affordability Score (RAS): The ratio of monthly rent to monthly salary, where higher values indicate less affordability.
- Home Purchase Affordability Score (HPAS): A combination of initial home-buying costs (deposit, stamp duty, fees) relative to annual salary, and ongoing mortgage payments relative to monthly salary. Higher values indicate less affordability.
We then created an Affordability Index by dividing HPAS by RAS.
It’s important to note that the time frames of the datasets varied, but we used the most recent versions available. Additionally, the data applies only to England and Wales.
Please also note, all interpretations of the data are that of the Bird & Co researchers.