UK ranks behind key European markets in housing affordability
Despite falling mortgage rates and house prices, homebuyers in the UK continue to face significant affordability barriers, with the typical purchaser now needing the equivalent of 167 monthly wages—almost 14 years of income—to afford a standard home.
New research comparing housing affordability and mortgage rates across 67 countries reveals that, while the average asking price for a UK property fell by 1.3% in August to £368,740 and annual price growth slowed to 0.3%, the gap between earnings and property values remains wide.
The study, conducted by BestBrokers, found that the average annual wage in the UK covers just 7.17% of the cost of a 1,080-square-foot apartment, placing the country 11th in Europe for affordability.
For many first-time buyers, the prospect of homeownership remains distant. The report highlights that, even with robust sales activity—agreed sales are up 8% year-on-year and listings have increased by 10%—affordability has not improved in line with falling prices. The government is reportedly considering replacing stamp duty with a tax on properties over £500,000, but the impact on affordability remains uncertain.
The analysis also shows that city centre properties command a significant premium, averaging £421.30 per square foot compared to £339.50 outside central areas. This results in a price difference of approximately £88,344 for a 1,080-square-foot apartment, further widening the affordability gap for those seeking to live in urban locations.
International comparisons underline the UK’s position. Ireland, facing similar housing pressures, requires buyers to save for nearly 10 years to purchase a comparable home—four years fewer than in the UK. France, Italy, and Spain all rank ahead of the UK for affordability, while Germany and Luxembourg are just behind.
“The data underscores a structural tension in the UK housing market: while short-term indicators like rising sales suggest resilience, the deeper affordability gap signals sustained pressure on first-time buyers,” said Paul Hoffman, analyst at BestBrokers.
“The fact that the UK ranks outside the top 10 in Europe, despite relatively moderate property price growth, points to a longer-term trend where wage growth is failing to keep pace with housing costs, particularly in urban centres.
“If mortgage rates remain elevated or the Treasury’s proposed reforms fail to meaningfully lower transaction costs for mid-market buyers, we can expect continued geographic divergence, with demand increasingly shifting to suburban and regional markets. Global and regional comparisons highlight both persistent affordability pressures and potential policy-driven opportunities to rebalance the market over the next three to five years.”
For mortgage brokers, these persistent affordability challenges mean clients—particularly first-time buyers—will continue to face difficulties securing loans, even as prices decline. Brokers may need to guide clients through alternative options such as longer mortgage terms or shared ownership, and offer tailored advice to help them navigate stricter affordability assessments.
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