The Fine Line of Affordability

We find ourselves in strange times in both the property and financial markets. A more considered and cautious approach seems to be the one favoured by most as we patiently wait and see what is around the corner in terms of property prices and mortgage availability. Positive news is tempered with words of warning and in the end we could all do with a helping hand.

Halifax have given us a ray of hope as they announced that housing is officially more affordable now than a year ago. With an increase in average annual earnings and the slight dip in property prices over the last year we can see the gap shrinking. A typical home now sits at 6.7 times the average annual earning whilst a year ago it was at 7.3. Average prices have dropped from £293,586 to £286,276 and earnings have grown by 7% according to the mortgage lender.

This good news has to be taken into perspective though as mortgages continue to take up bigger chunks of income with some estimates suggesting 35% of a homeowners income is dedicated to mortgage repayments. Even more worrying are reports that the value of mortgage arrears has increase by almost a third between April and June compared to last year. Higher rates and repayments can bring more financial struggles.

That said reports from finance experts explain that the actual proportion of outstanding mortgage balances in arrears remains low at just 1%. Cut backs in discretionary spending and more controlled financial budgets means the vast majority of people are still in an affordable position.

The helping hand that many of us are reaching out for so often comes from the ‘Bank of Family’. Previously referred to as the ‘Bank of Mum and Dad’, the helped supplied by relatives and sometimes even friends has traditionally been there in times of financial need.

Legal and General have reported that almost a half of all homes bought (47%) by people under the age of 55 will have been done so with the help of family members this year. This means that the property market has been allowed to continue and sales levels have maintained throughout 2023.

Our advice would be to seek the help of experts. We have property and financial experts available to speak to in our offices who will happily put your mind at rest, be it affordability or property sales related.

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