The ability to buy an average home in England and Wales improved everywhere last year except in the South East.
First-time buyers saw the largest improvement of all buyer groups, according to the latest quarterly Ability to Buy index from Hamptons International, published today.
Buyers in the North East and Wales saw the biggest improvement in their ability to buy a home.
Ability to buy the average home in England and Wales was 2% better in Q3 2015 than in the previous year.
After spending on essentials and mortgages, households are on average £69 better off each month, leaving them more cash to put towards a home.
The average first-time buyer has seen a 10% increase in their income after tax and spending on essentials and mortgage payments.
Compared to Q3 2014, those in the North-East and South-West fared best with a 17% increase, those in the South-East were 1% worse off.
Household spending power has been boosted by modest wage growth, an increase in the tax-free personal allowance and the lower cost of essentials.
House price growth coupled with falling mortgage rates, have also boosted people’s ability to buy.
Fionnuala Earley, director of Residential Research at Hamptons International, said:
“With inflation remaining low and wages increasing in real terms, most households are seeing their money stretch a bit further.
“The added bonus of the higher tax free personal allowance announced at the last Budget, means households get to keep more of their income, improving their ability to buy.
“On top of this, global economic uncertainties mean that interest rate rises look even further away, giving buyers a little more leeway too.
“While it’s encouraging that ability to buy is getting better year-on-year, with prices 5.5 times higher than incomes, it’s still very expensive to buy a home, and out of reach for many first-time buyers.
"The key to better affordability is for wages to increase substantially faster than house prices.”