A Scottish area has been named as the "most affordable" for first-time buyers in the UK, new data has found.
Inverclyde topped the list for affordable local authorities over 2022 in Nationwide Building Society's latest affordability report. Meanwhile, Edinburgh was found to be among the least affordable areas in the UK, taking the 10th spot on the list of expensive areas.
Nationwide calculated affordability for first time buyers by comparing local house prices to earnings, known as a house price to earnings ratio (HPER). Inverclyde has a HPER of 2.6 while Edinburgh's was 6.2.
While there was a noticeable gap between the two Scottish areas, the least affordable Local Authority overall, Westminster in London, had a HPER of 15.6.
Commenting on the figures, Andrew Harvey, Senior Economist, said: "The biggest change in terms of housing affordability for potential buyers over the past year has been the rise in the cost of servicing the typical mortgage as a result of the increase in mortgage rates."
Most affordable local authorities
Region | Local Authority | HPER |
Scotland | Inverclyde | 2.6 |
North West | Burnley | 3.1 |
North | County Durham | 3.1 |
Wales | Blaenau Gwent | 3.8 |
West Midlands | Stoke-on-Trent | 3.8 |
Yorkshire & The Humber | North East Lincolnshire | 3.9 |
East Midlands | Bolsover | 4.4 |
East Anglia | Great Yarmouth | 5.4 |
South West | Swindon | 5.4 |
Outer South East | Southampton | 5.9 |
Outer Metropolitan | East Hertfordshire | 6.3 |
London | Bromley | 7.4 |
Mortgage rates rose last year as a result of inflation which has led to the Bank of England increasing its borrowing base rate.
Citizens Advice Scotland said there had been a 223 percent increase in use of their mortgage calculator to work out monthly bills.
Mr Harvey added Scotland typically has the lowest house price to earnings ratios compared to other parts of the UK.
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While it did not appear in the most affordable or least affordable lists, Aberdeen was ranked eighth for areas that have seen an improvement in affordability.
The city's HPER in 2021 was 3.4, however this has dropped to 3.1 in 2022, meaning that homes are slightly more affordable based on the average income in the area.
While some positive movement is welcomed, Mr Harvey warned that mortgage rates "are taking longer to normalise" and affordability may only see "little" improvement in 2023.
He said: "There is some scope for affordability to improve a little in the year ahead. Longer-term interest rates, which underpin mortgage pricing, have fallen back towards the levels prevailing before the mini Budget."
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