There was continued improvement in affordability for first-time buyers in 2025 says the Nationwide.
But there were considerable variations in affordability across different demographics.
Affordability was toughest most for people working in sales and customer service, but easier for those in managerial and professional roles.
Regionally it was most stretched in London and South of England, while North and Scotland are the most affordable.
Andrew Harvey, Nationwide’s Senior Economist, says: “With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat.”
The first-time buyer share of house purchase activity was above the long run average last year.
It was around 20% higher than 2024 levels.
“A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 32% of their take-home pay.
“[This is] slightly above the long-run average of 30% and well below the recent high of 48% recorded in 1989.”
There has also been an improvement in the first-time buyer house price to earnings ratio (HPER) to 4.7.
This is a continuation of the trend seen over recent years, with the ratio now slightly below its 20-year average.
This suggests it is a little easier for prospective buyers to save for a deposit, although Nationwide claims it is still challenging for those in the private rented sector, given rental increases in recent years.
A significant proportion of first-time buyers still have to draw on help from friends and family to raise a deposit.
In 2024/25, over a third of first-time buyers had some assistance raising a deposit, either in the form of a gift or loan from family or friends, or through an inheritance.
Affordability across different occupations
Perhaps unsurprisingly, Nationwide says mortgage payments relative to take-home pay remain lowest for those in managerial and professional roles, where average earnings tend to be higher.
All occupations have seen an improvement in affordability since 2024, with the biggest improvement being for those working in caring, leisure and other service occupations, which have seen higher earnings growth.
Harvey says: “Affordability is most challenging for those working in sales and customer service roles and for those classified as ‘elementary occupations’.
“[These] include construction and manufacturing labourers, cleaners and couriers. In these groups, typical mortgage payments would represent around 50% of average take-home pay.
“The differences in affordability reflect the divergence in earnings by occupational group.
“For example, managers, directors and senior officials typically take home around twice as much per year than those working in administrative and secretarial roles.”
Regional breakdown
All parts of the UK, with the exception of Northern Ireland, have seen a continued improvement in affordability over the past year when looking at the costs of servicing the typical mortgage as a share of take-home pay.
Northern Ireland saw a deterioration in affordability due to the strong house price growth experienced over the past year.
And, while mortgage payments as a share of take-home pay are a little lower than the UK average, they are now noticeably above the long-run average in the region.
For the second year running, London saw the largest improvement in affordability, reflecting relatively weak house price growth in 2025, solid earnings growth and lower interest rates.
Nevertheless, the capital remains the least affordable region by a significant margin.
Affordability pressures remain pronounced in the South of England.
In the North, Yorkshire & The Humber and Scotland, mortgage payments as a share of take-home pay are actually slightly below their long-run average.
Harvey concludes: “London stands out as the area with the greatest divergence, with actual first-time buyer earnings (for a single borrower) around 45% higher than average incomes in the capital.
“But in regions where affordability is less stretched, such as the Midlands, actual first-time buyer earnings tend to be much closer to regional averages.
“And in a few areas, most notably Scotland, the incomes of actual first-time buyers are below the average income in the region, indicating relatively healthy housing affordability.”
This article is taken from Landlord Today