“Cost of living is set to outpace earnings growth by a significant margin again this year, while labour market conditions are widely expected to weaken,” Harvey explained.
“Rents have also been rising at their strongest pace [since 2005,when record began], which will be a further drag for those currently renting who are looking to buy a home.”
Across UK regions, affordability remains the most challenging across London and the south of England. Scotland and the North continue to be the most affordable regions but, even there, Nationwide’s report shows mortgage payments as a share of take-home pay are at their highest level for more than a decade
Only around 10 per cent of local authorities have seen an improvement in affordability over the past year.
Managing Director at J Finance Ltd, Rowan Frayling, said he has clients who are currently house hunting, but that they have had to revise their price range as a result of the significantly higher mortgage payments.
“A client who was buying at £375,000 in May last year until the transaction fell through, is now only able to look at properties with a maximum value of £335,000.
“The resulting mortgage payments are still £100 more a month with the same percentage deposit.”
Some brokers say the worsening affordability picture means longer waits for those who were nearly there.
A scheme for home builders and buyers alike “is urgently needed” to stimulate the affordable housing sector.Samuel Mather-Holgate, Mather and Murray Financial
“Some may have had to spend that deposit due to costs going up,” said Mortgages For Actors founder, Austyn Johnson.
“Some will have made their deposit, but now want to wait in case they need it for financial stability.
“Affordability has been hit, and house prices will slow or plateau due to it.”
House prices are predicted to fall anywhere between 5 and 15 per cent, and have been on the decline for the past three months.
With the wind up of the government’s Help To Buy scheme this year, brokers have long been calling for a replacement to help first-time buyers afford a mortgage.
Adviser at Mather and Murray Financial, Samuel Mather-Holgate, said a scheme for home builders and buyers alike “is urgently needed” to stimulate the affordable housing sector.
“Help to Buy wasn't perfect by a long shot, but when it was removed it dried up an already parched sector of the housing market,” said Mather-Holgate.
“Home builders also need incentives to build affordable housing. Planning needs to be easier as there is a massive shortage of housing on this island.”