The latest figures from Halifax have revealed that housing is more affordable than it has been in nearly seven years, thanks to falling house prices and record-low interest rates.
British homes are now more affordable than they have been in the last seven years, according to new research from Halifax.
The study showed that the proportion of disposable income spent on mortgage payments, used as a key affordability measure, has fallen from a high of 48 percent in the third quarter of 2007 to just 31 percent in the first three months of this year. According to the organisation, the decline in house prices and historically-low interest rates have been behind the trend.
"As a result, housing is at its most affordable for almost seven years," said Halifax housing economist Martin Ellis. "Notably, mortgage payments for a typical new borrower as a proportion of average earnings are now below the average for the past 25 years."
While house prices have tumbled, the Bank of England has reduced its base rate to an unprecedented low of 0.5 percent, although the institution made no changes to the rate this month. This process is aimed at making credit cheaper, allowing banks and building societies to offer mortgages and other products to consumers at a reduced rate.
However, Mr Ellis suggested that the property market would continue to be difficult "during the remainder of 2009". He explained: "Increasing unemployment, low consumer confidence and the constraining effects of the continuing dislocation of the financial markets on the availability of mortgage finance are all likely to exert downward pressure on the market over the coming months."
