Mapped: The most and least affordable places to rent or buy a home in UK, according to new index

Nearly 80 per cent of potential first-time buyers lack savings for deposit needed in their local area, Skipton Building Society analysis suggests

Sir Keir Starmer has promised action to reduce mortgage costs (Yui Mok/PA)

With house prices reported to be rising at their fastest rate since 2022, a new index has ranked the most and least affordable places to either rent or buy a home in the UK.

House prices have risen 2.1 per cent over the past year to hit an average of £266,334, figures from Britain’s third-largest mortgage lender Nationwide suggested this week.

It came as the Skipton Building Society published a new index seeking to help current or prospective homeowners identify the most affordable areas in the UK to rent or buy a property.

The Bank of England finally lowered interest rates this week to 4 per cent, providing some relief to mortgage-holders (Joe Giddens/PA)

Using both Skipton’s and official data sources to examine factors such as buying power, income, deposits, bills and maintenance costs, the index rates south London as the most expensive place to find a home. The Highlands and Hebrides was judged to be the most affordable of the 40 areas analysed.

Highlighting the dire situation facing many in Britain, the research found only one in eight potential first-time buyers can afford to purchase the average first-time property in their area, with nearly 80 per cent having insufficient savings for the deposit needed to get onto the local property ladder.

The research suggests that nearly four in 10 renters spend 45 per cent or more of their income on essential housing costs, compounding their inability to save for a deposit.

While fewer than 1 per cent of those earning below £22,850 a year can afford to get onto the property ladder in their local area, it is estimated that still applies for more than half of those earning over £71,250 a year despite being in the top 25 per cent of earners.

Generally, London was the most unaffordable city in terms of both renting and buying properties, while Scotland was the most affordable.

You can see a map breaking down the rankings and affordability ratings out of 100 here:

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According to the index, the most affordable areas overall for renters were in eastern Scotland, Gloucestershire, Wiltshire and Bath, while the least affordable were in London.

First-time buyers also fared best in east Scotland and the Highlands and Hebrides, with the worst prospects deemed to be in the West Midlands, south London, Herefordshire, Worcestershire and Warwickshire.

Prospective buyers with existing mortgages faced the best prospects in Northumberland and Tyne and Wear, Tees Valley and Durham, and the Highlands and Hebrides, with the least affordable areas deemed to be Surrey, Sussex, Kent, Hampshire and the Isle of Wight.

Posting 5 per cent profit growth to a total of £157m before tax in the first half of 2024, the Skipton Group – which encompasses the UK’s largest estate agency – said the number of properties placed on the market had risen 15 per cent compared to June 2023, with house viewings rising by the same percentage.

The group also said it saw no significant signs of landlords leaving the market and reported ending June with 24 per cent more properties available to rent than at the same time last year.

Here are the affordability rankings across 40 areas in Scotland, England and Wales, from least to most affordable:

1. Outer London – South

2. Inner London - East

3. Outer London – East and North East

4. Inner London – West

5. Outer London – West and North West

6. West Midlands

7. Devon

8. Essex

9. Cornwall and Isles of Scilly

10. Herefordshire, Worcestershire and Warwickshire

11. Shropshire and Staffordshire

12. Dorset and Somerset

13. Hampshire and Isle of Wight

14. Lincolnshire

15. Derbyshire and Nottinghamshire

16. North Yorkshire

17. Berkshire, Buckinghamshire and Oxfordshire

18. West Wales and the Valleys

19. Surrey, East and West Sussex

20. Leicestershire, Rutland and Northamptonshire

21. Kent

22. Merseyside

23. South Yorkshire

24. Gloucestershire, Wiltshire and Bath/Bristol

25. East Anglia

26. East Yorkshire and Northern Lincolnshire

27. Bedfordshire and Hertfordshire

28. West Yorkshire

29. Lancashire

30. Cumbria

31. East Wales

32. Cheshire

33. Southern Scotland

34. Greater Manchester

35. Northumberland and Tyne and Ware

36. Tees Valley and Durham

37. West Central Scotland

38. North Eastern Scotland

39. Eastern Scotland

40. Highlands and Islands