A look at the affordability of housing

21 September 2023

affordabilitycredit worthinessdepositFinancial EducationhousingMeeting of MindsMortgage

Expert: Pete Docker, Chief Commercial Officer, Generation Home Facilitator: Evie Owen


  1. The latest housing affordability research estimated that in the 12 months to September 2022, in England, the average (median) home sold for £275,000 while the average (median) workplace-based full-time earnings were £33,200, giving a ratio of 8.3
  2. In Wales, the average (median) home sold for £190,000, while the average (median) workplace-based full-time earnings were £30,600, giving a ratio of 6.2
  3. The current ratio for England, compared to 4 in the year 2000 means it has doubled. The average deposit needs to be £43,400 and the average age of a first-time buyer is 34

Discussion points:

There after all nearly 3m seeking to acquire their own home and the three keys to the mortgage kingdom are:

  • Deposit
  • Credit worthiness
  • Affordability

47% of all buyers will receive some sort of family support – worth about £8.1bn. 58% of these buyers are first timers.

Although, it is generally acknowledged that at the root of all this is the shortage of new housing, (according to government data, the number of new builds in 2022 in England was 178,000), the goal of this session is to consider what can be done to aid affordability.

When one talks about family support, it should not just be viewed as the older generations helping the younger generations. Our expert cited the example of parents being helped to buy their first house by their children.

According to a report by the Resolution Foundation (admittedly published in 2018), if your parents have property wealth you are almost three times as likely to be on the property ladder by the age of 30 when compared to those whose parents have no property wealth.

A third of those living in social housing have a fear of rejection. They may also be more likely to have shadow debt or fear acquiring it.

There was a lot of talk around the issue of exclusion and it was agreed that education was a big piece of the conversation. The level of financial literacy in the UK is shockingly low.

How do you educate those lacking the confidence? The Life Skills campaign by Barclays was praised as a start.

The role of professional advice
To take on a mortgage is a big thing and it was suggested that the role of mortgage adviser has a big role to play in terms of providing confidence and expertise.

One of the brokers within the group confirmed that there was a noticeable uptick in the demand for meetings. Especially with so many fixed rate mortgages coming to the end of their life.

Professional advice can also pick up information that an online process might not. For example, one client had a classic car collection and a buy-to-let portfolio. This additional wealth may well have not been picked up online. Mortgage advisers are good at opportunity spotting.

Our expert suggested that Consumer Duty should be viewed as a stimulator rather than a stifler when it comes to building new products. You can’t enter your client into these schemes without a thorough piece of advice. It provided reassurance.

Stamp Duty/CGT
The group briefly discussed Stamp Duty – asking whether it was a regressive or progressive tax? It was felt that a reduction of some sort would certainly increase transactions as was evidenced by the “holiday” during the pandemic and that this would aid housing market liquidity.

It was also viewed that a lower CGT on buy-to-let properties would increase activity.

Our expert’s company, an innovative fintech leverages shared ownership as a solution to overcome the lack of affordability. A family member will go on the mortgage to increase borrowing, but won’t own or live in the home.

With so much policy uncertainty, there was a fundamental issue around lenders spending money on developing systems to help with new schemes when they lack confidence they will be around for long. However, here is some of the new thinking:

  • Our expert used the example of Hong Kong where clients could obtain a mortgage if they had sufficient assets to pay three years of their mortgage
  • One of the groups compared mortgage applications from people with a rental history compared with an applicant who had been living at home. Surely the former experience should be considered more valuable?
  • Shared Ownership was thought to have worked well but that the councils then became greedy. It was also mentioned that staircasing opportunities no longer exist
  • 100% mortgages. With increasing rates and high inflation this was considered a brave move but one which was carefully aimed at certain mortgagee demographics
  • 30 year fixed. With such uncertainty in the financial markets, there was little consumer enthusiasm right now
  • Helping Hand from Nationwide

The level of repossessions is apparently remarkably low with just 2,500 properties in the UK. This was most likely due to the optics!

Preparing potential buyers to be mortgage-ready
The ideal is to engage with potential buyers early.  

Should the messaging be more around “I want to buy a house”? A more positive conversation than “I don’t want a mortgage”.

They need to be taught how to improve their credit score. One participant had noted the increase in the number of downloaded budget planners.

As an aside, it had been noted that existing borrowers were paying off chunks of their mortgage; that savings balances were coming down; and people were having to cut back – especially those facing remortgaging.

Key takeaways:

  • The clearest message is the need for more houses to be built and the need for financial education
  • While the latter is out of the group’s control, pressure for a more concerted effort on the educational piece exists either by the lenders or by the trade representatives