The average first time buyer now needs a salary of £77,000 to buy a home, says KPMG, as house prices continue to rise.

A report by accountants KPMG shows that across the country the average first time buyer must have earnings of £40,553 to buy their first home and this is almost double the average UK salary of £22,044.

For London the figure is much higher at £76,971 compared to average salary of £27,999 based on a 10% deposit and a mortgage of 90% from a lender with 4.5 times loan to income.

House prices increasing by 9.6% in the last year to March, according to the Office of National Statistics (ONS), and by 7.8% for first time buyers will only increase the difficulties to purchase their homes.

With competition from buy-to-let investors there are fewer affordable properties for first time buyers and they must continue renting and saving for a bigger deposit.

Figures vary widely across the country

Although there is a large difference in the gap between the actual and required average income between the South and North of the country, generally affordability is a problem across the whole country.

In the North of England, Scotland and Northern Ireland this difference is much narrower compared to the South East of England and London.

The average income for the South East is £24,391 and a first time buyer would need an income of £46,010 to afford the actual average property price of £230,049.

Northern Ireland has the smallest gap with an actual average income of £18,857 and required income of £21,219 to purchased an average property valued at £106,094.

Moving away from the South East the gap begins to narrow and in the North east the actual income is £20,149 against the required income of £23,616.

London has the largest gap with an average income of £27,999 although a first time buyer would need an income of £76,971 to buy a property with an average price of £284,856.

Without family help to upsize, the only option is for remortgage buyers to stay in their existing home and continue saving more for a bigger deposit.

Housing affordability is no longer just a problem for lower wage earners, says Jan Crosby, head of housing at KPMG.

A reduced supply of affordable properties for home movers means more remortgage buyers remaining in their existing home and saving for a bigger deposit.

Affordability not the only problem

Currently 30% of people are concerned about how they will afford to own a home with the younger generation most concerned  rising to 57% of 16-17 year olds and 52% of 18-24 year olds have concerns about affordability.

The KPMG report shows that 69% of people feel there is not enough housing in the UK that is affordable for first time buyers.

Help for first time buyers can come from family members as the equity release buyer can access wealth using a lifetime mortgage gifting the deposit children and grandchildren.

For those aged over 55 the proportion increases to 77% and this may be due to a time when owning a property was affordable, as the gap between income and house prices has continued to increase between 1985 and 2015.

Even though affordability is such an issue as a country 73% of people would prefer to buy a property rather than rent. Jan Crosby has said unless you earn well above average or receive an inheritance, it is unlikely you will be able to afford to buy, no matter where in the UK you live.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to improve your quality of life, for home improvements or even help children start or expand a business.

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