League tables reveal least affordable areas for young homebuyers in the West Midlands

By comparing average local incomes for earners in their 20s and 30s with the typical prices of a less expensive starter home, the analysis shows that 36 per cent of young working households across the region would have difficulty affording a modest starter home. This compares with almost 50 per cent nationally.

The access to ownership league for the West Midlands ranges between Herefordshire and South Shropshire, where 58 per cent of working households under 40 would be unable to purchase less expensive 'two‑up, two-down' homes in the district, to Rugby where only 19 per cent experience the same problem. In Birmingham, starter home prices are beyond the reach of around 33 per cent of young working households in the city, compared with nearly 80 per cent across inner London.

The new study also shows that, unlike the south of England, starter home prices in a number of West Midlands districts are low enough to be affordable by key workers. For example, in Stoke on Trent a qualified nurse, teacher, police officer or social worker with 3 years’ experience, would find the bottom 25 per cent of the price range for modest 4- and 5‑room homes within their reach.

This contrasts with Bromsgrove, Wychavon, Bridgnorth, Stratford-upon-Avon, Warwick and Solihull where a single nurse's income is less than 65 per cent of the estimated level needed to start buying with a mortgage.

The report, by Prof. Steve Wilcox of the University of York, presents three different ‘affordability’ indices comparing younger workers’ earnings with house prices for 4- and 5-room homes in every English borough and district. They cover

• Local house price to income ratios, calculated by comparing the average price for starter homes in each district with average local incomes for working households under 40.
• An access to ownership index that calculates the percentage of working households under 40 in each district whose pay is too low to purchase even the less expensive starter homes (the bottom quarter mark of the local price range).
• A key worker index, identifying local authority areas where a qualified nurse, teacher, social worker or police constable in post for three or four years would be unable to afford the less expensive starter homes.

The resulting league tables show that:

• House price to local income ratios for West Midlands districts were almost all below the average of 3.4 for England. Districts with the five highest ratios were: Herefordshire, Malvern Hills, Bridgnorth, South Shropshire and Stratford-upon-Avon. The five lowest ratios were in: North Shropshire, Oswestry, East Staffordshire, Stoke-on-Trent and Coventry.
• The access to ownership index showed that the region’s five most accessible districts for workers under 40 on average local pay rates to start climbing the housing ladder were: East Staffordshire, Stoke-on-Trent, Nuneaton & Bedworth, Rugby and Coventry. The five least accessible districts were (again): Herefordshire, Malvern Hills, South Shropshire, Bridgnorth and Stratford-upon-Avon.
• The five most affordable areas for key workers were: Telford & Wrekin, Newcastle-under-Lyme, Stoke-on-Trent, Nuneaton and Bedworth, and Coventry. The five least affordable districts for teachers, police, social workers and nurses were Bromsgrove, Bridgnorth, Stratford-upon-Avon, Warwick and Solihull. For instance, a qualified nurse with 3 or 4 years’ experience in Stratford-upon Avon would have only 62 per cent of the estimated annual income needed to start buying a less expensive starter home in the district. However, this compares with parts of London, the South, and Eastern Region where even two key worker incomes would not be enough to buy a modest house or flat.

Prof. Wilcox said: "Starter homes in the West Midlands are generally more affordable than those in London and the South East, yet there are still a substantial number of districts where a third or more of young working households cannot afford their first step into home ownership. House prices are lower than in the South of England, but the ‘affordability’ gap tends to narrow once differences in the level of local pay and incomes are taken into account."

He added: "The position of key workers, such as nurses, teachers and police, is rather different because their pay rates are largely determined at national level. House prices in a few districts – Stratford-upon-Avon, Warwick, Bromsgrove, Solihull, Wychavon and Malvern Hills – are less affordable than the national average for these groups. But there are also many districts, including Birmingham, Coventry, Stoke and Wolverhampton where their individual incomes are adequate or very close to the level needed to raise a mortgage on a modest starter home."