New research from MoneySuperMarket this week revealed that it would take couples in Portsmouth a minimum of 9 years to pay off their mortgage and own their home outright. In other areas of the country, it would take them 27 years.
The new research utilises data from the Office of National Statistics (ONS) and the Land Registry, analysing house prices and salaries to calculate the average deposit needed to buy a house.
Portsmouth emerges as the 157th most affordable place to live in the UK out of 380 local authorities, with London boroughs dominating the top 20 for highest average mortgage deposits. Kensington and Chelsea is the most unaffordable place to live in the UK, with house prices averaging £1.3 million, requiring a local couple earning an average salary to save a 52% deposit before buying in the area. The MoneySuperMarket research indicates these couples would need to save for 23 years before they can buy a home.
In 75 local authority areas, a couple earning an average salary would need more than a 20% deposit and in 39 areas, the deposit required increases to more than 30%.
The average house price in Portsmouth is £195,206. On Rightmove, this can buy a two-bedroom flat in Old Portsmouth or if you want more space to start a family, a three-bedroom terraced house in Copnor. The average minimum mortgage deposit required on such a property is £9,760.
The average joint salary of a couple in Portsmouth is £48,494 and the average minimum mortgage deposit required in the city is £9,760. Factoring in the average UK household spend of £27,488, MoneySuperMarket calculates that the quickest a couple could pay off their mortgage is 9 years.
It seems even less likely that single individuals in the city will fare much better in the home-owing stakes. Job site Adzuna places the average salary of jobs it advertises in Portsmouth at £28,979 annually, and average gross weekly earnings in Portsmouth in 2011 were reported at £469.50, making it even harder for single individuals to afford to buy a property.
Banking expert, Kevin Mountford commented on the new research, saying ‘as house prices continue to rise, the dream of owning a home becomes harder and harder to reach for so many people.’ He added that striving to reach the minimum deposit can cause ‘serious financial strain’ to aspiring homeowners and people ‘might be priced out of their desired area’.
For couples wishing to live in Southsea, a three-bedroom terraced house can cost £425,000, a 217% increase from a similar property in Copnor.
The government aimed to encourage new homeowners with schemes such as the Help to Buy Mortgage Scheme and Equity Loans, which provide low interest loans to prospective buyers. However, take up of the scheme has been higher in areas where property prices are lower, outside of the south east region.
The Mortgage Scheme officially closed in December 2016, with only the Help to Buy Equity Loan programme continuing until 2020, and only in England.
According to research undertaken in February 2017 by the BBC:
‘In Portsmouth there have been 130 Help to Buy Equity Loans taken out at an average per loan of £47,618. That works out at 1.5 loans per 1,000 homes. This puts it at 263 out of 325 local authority areas in England for the rate of loans per household.’
Speaking to the BBC, Roger Harding, Shelter’s director of communications, policy and campaigns, said: “While a Help To Buy equity loan might help some first-time buyers on to the ladder, in the short-term there is a risk it will push up house prices making it even tougher for others to buy a home in the future.
“If the government really wants to tackle our housing shortage, its best bet is to start with building homes that are genuinely affordable for people on low to average incomes to buy and rent long-term.”
This article was amended at 17.05 on 27th July in response to a number of queries from readers about how the figure of 9 years was arrived at, and the estimate of a Portsmouth worker’s average earnings. We contacted MoneySuperMarket’s press agency, who told us:
‘We deduct the average UK household spend (this includes bills, living expenses) of £27,488 from the average salary of a Portsmouth couple. This leaves us with the estimate of at least 9 years – the quickest amount of time an average couple could theoretically pay off their mortgage.’