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

By comparing average local incomes with the typical prices of a less expensive starter home, the analysis shows that four out of ten young working households across the region would have difficulty affording a modest starter home. This compares with five out of ten nationally.

The access to ownership league for the East Midlands ranges between North Kesteven, where almost 55 per cent of young working households would be unable to purchase less expensive 'two‑up, two­-down' homes in the district, to Corby in Northamptonshire, where only 29 per cent experience the same problem.

The new study also shows that, unlike the south of England, starter home prices in a number of East Midlands districts are low enough to be affordable by key workers. For example, in Corby and in Bolsover, Derbyshire, 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 South Northamptonshire, Rutland, and Rushcliffe in Nottinghamshire where a nurse's income is less than 75 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 East Midlands districts were almost all below the average of 3.4 for England. Districts with the ten highest ratios were: High Peak and North East Derbyshire, North West Leicestershire, Rutland, North Kesteven, Boston, and East and West Lindsey, South Northamptonshire and Nottingham. The ten lowest ratios were in: Derby, South Derbyshire, Hinkley and Bosworth, South Holland, Corby, East Northamptonshire, Kettering, Wellingborough, Newark & Sherwood and Rushcliffe.
• The access to ownership index showed that the region's ten most accessible districts for workers under 40 on average local pay rates to start climbing the housing ladder were: Amber Valley, Derby, South Derbyshire, Bolsover, Erewash, Corby, Daventry, Wellingborough, East Northamptonshire and Kettering. The ten least accessible districts were: Rutland, North West Leicestershire, Oadby and Wigston, North Kesteven, East Lindsey, West Lindsey, Boston, South Kesteven, Lincoln and Nottingham.
• The ten most affordable areas for key workers were Amber Valley, Bolsover, Derby, Leicester, Lincoln, Corby, Ashfield, Bassetlaw, Mansfield and Nottingham. For example, the income of qualified nurse with 3 or 4 years' experience would be above the level needed to begin buying a modest starter property in Bolsover, Derbyshire and 99 per cent of the level needed for an equivalent property in Nottinghamshire's Bassetlaw district.
• The ten least affordable districts for key workers were Derbyshire Dales, High Peak, Blaby, Charnwood, Harborough, Oadby and Wigston, Rutland, Northampton, South Northamptonshire and Rushcliffe. A qualified teacher with 3 or 4 years’ experience in South Northamptonshire would have only 73 per cent of the estimated annual income needed to start buying a less expensive starter home in the district. However, these figures compare favourably 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: "Although house prices in the East Midlands are more affordable than those in London and the South East, 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. It tends to cost less to buy a starter home further south in the region, but the 'affordability' gap starts 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 places, notably Rutland, South Northamptonshire and Rushcliffe, are slightly less affordable than the national average for these groups. But there are also districts where their incomes are adequate or close to the level needed to raise a mortgage on a modest starter home."