Explore the affordability of buying and living in a home across Great Britain using our interactive tool.
Split by local authority area, the index allows you to look up the cost of renting, buying a first home, and moving up the property ladder where you live. You can also check how your local authority area compares to the rest of Britain.
Watch our short video to find out more, or start exploring below.
Our latest Skipton Group Home Affordability Index finds 98% of adults living with their parents cannot afford to buy the average first-time buyer home in their local authority area, based on their own financial situation.
The Index draws on a unique data set that brings together data from Skipton Group businesses, Office for National Statistics, Bank of England, Land Registry and third-party external sources. It also uses forecasts from Oxford Economics’ Global Economic Model. All of this data not only provides a picture of home affordability today, but offers insights into its likely trends into the future. Read more about our methodology.
The four key metrics that are used to produce the Home Affordability Index are outlined below. For more detail, please see the accompanying methodology document.
The maximum property value a household can afford underpins the buying affordability score. It depends on two key elements. Firstly, household deposits. And secondly, the maximum mortgage a household can get based on their demographic and financial characteristics.
The value of a deposit a household could put towards a property is calculated by taking the value of their savings (plus any property equity), before subtracting for some ‘rainy day’ expenses and moving costs. Moving costs include conveyancing fees, stamp duty, estate agent fees, removals, home surveys and mortgage fees.
The maximum mortgage loan a household could receive is calculated using insights from Skipton’s Credit Risk team. It depends on the household income, household composition and the applicant’s age. In addition to households’ financial characteristics this metric reflects changes over time in the maximum mortgage lenders are willing to offer, which are driven by their stress testing.
The total cost for a household taking their first, or next, step onto the property ladder in their local area is based on each household’s characteristics. This is rather than simply considering the local property price or the average property price across Great Britain. Our approach to estimating relevant house prices differs depending on whether the household is a potential first-time buyer or existing owner-occupier.
A list of spending categories considered essential for running a home have been grouped together to estimate total household spending on essential housing costs. These costs feed into the living affordability score. They can be broadly grouped into the following categories – mortgage payments, rental costs, council charges, utility bills, insurance, property maintenance and repairs, and household goods. For each household, their overall essential housing cost is based on the sum of these spending categories.
Gross household income is used to calculate the living affordability score. It is calculated as the sum of employment income, self-employed income, total benefits received, pension income, investment income and other regular income minus housing benefit.
The Home Affordability Index captures Great Britain’s housing challenge. We do this by assessing both buying affordability and living affordability. These two measures (on their own we class them as sub-indices) are combined to produce the overall Home Affordability Index. The Index (and sub-indices) are scored from 0 to 100. A score of 50 reflects the average affordability score across Great Britain in Q1 2020. The Index allows comparisons of housing affordability to be made over time. It also allows you to track affordability across different groups of the British population.
The buying affordability sub-index captures the relationship between households’ buying power and the total cost of taking a first, or next, step on the property ladder in their local areas. The greater a household’s buying power relative to this cost, the greater their buying affordability. Buying power combines a household’s deposit (after factoring in moving costs and holding back some ‘rainy-day’ expenses) and the maximum mortgage the household can get, based on their demographic and financial characteristics. The property price reflects the property a household is most likely to buy. This is based on their tenure status and the region where they live.
The living affordability sub-index is based on the proportion of gross household income spent on essential housing costs. The lower the proportion of household income spent on housing costs, the greater the living affordability. These costs cover mortgage and rent payments. They also include council charges, utility bills, plus property maintenance and repairs.
The buying ratio (buyer power / reference price) and living ratio (essential housing costs / gross household income) are calculated for every household in our dataset. These ratios are transformed using a z-score approach. This is to convert them onto a 0-100 scale, with higher numbers representing better affordability. A score of 50 reflects the average across Great Britain in Q1 2020. Therefore, index scores above 50 reflect an improvement in affordability relative to that period.
The Index scores provide an effective means to compare affordability trends over time, or the relative affordability position of different cohorts. However, it does not provide an assessment of the proportion of households in an affordable or unaffordable housing situation. An alternative way to analyse the data is to calculate the proportion of households who score above or below an affordability threshold. This is in terms of both buying and living perspectives.
Housing is deemed affordable to buy for a household if their maximum buying power is equal to, or above, the value of the cost of moving onto, or up, the property ladder. A household is considered to face unaffordable housing costs if they spend 45% or more of their gross household income on maintaining their home.
The businesses that make up the Skipton Group see, hear, and understand the challenges facing the UK housing market every single day. Sharing these insights gives us a clearer overall picture. And we’re using this intelligence to help address the challenges millions of Britons are facing – especially first-time buyers.
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