League tables show North East is ‘the most affordable region for young homebuyers’

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 nearly 23 per cent of young working households across the region would have difficulty affording a modest starter home in their district. This is less than half the national average of almost 50 per cent.

The access to ownership league for the North East ranges between Tynedale where 42 per cent of working households under 40 would be unable to purchase less expensive 'two‑up, two-down' homes in the district, to Wear Valley where only 8 per cent experience the same problem. In Newcastle, Gateshead and Sunderland, starter home prices are beyond the reach of fewer than one in four young working households, compared with more than three out of four across inner London.

The new study also shows that, unlike the south of England, starter home prices in most North East districts are low enough to be afforded by key workers. There are no districts where 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 beyond their reach.

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 North East districts were all below the average of 3.37 for England. Districts with the five highest ratios were Tynedale, Berwick-upon-Tweed, Darlington, Middlesbrough and Redcar & Clevedon. The five lowest ratios were in: Wansbeck, Teesdale, Wear Valley, Sedgefield and Easington.
• 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: Wear Valley, Easington, Wansbeck, Teesdale and Sedgefield. The five least accessible districts were: Tynedale, Berwick-upon-Tweed, Alnwick, Darlington, and Redcar & Clevedon.
• The five most affordable areas for key workers were: Wansbeck, Easington, Hartlepool, Derwentside and Sedgefield. The least affordable districts for key workers were Tynedale, Alnwick, Durham, Newcastle and Stockton. However, there were no North East districts where the income of a teacher, police officer, social worker or nurse with 3 or 4 years’ experience would be below 100 per cent of the estimated level needed to start buying a modest starter home in their area. This compares dramatically 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 North East are among the least expensive in England and far more affordable than those in London and the South. Yet there are still three districts – Tynedale, Berwick-upon-Tweed and Alnwick - where a third or more of young working households cannot afford their first step into home ownership. House prices are lower than further south, 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. The good news across the North East as a whole is that the individual incomes of qualified teachers, police officers, social workers and nurses are at or higher than the level needed to raise a mortgage on a modest starter home."