Halifax research shows prices pass affordability test in 39% of areas of the UK

Affordability has increased for those buying their first home in the UK, according to research from the Halifax.

The UK's biggest mortgage lender said that mortgage payments in relation to earnings have dropped to significantly below the average over the past 25 years.

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Prices and interest rates have fallen, but high deposit requirements are still holding back first-time buyers

In 39% of local authority districts, someone on average earnings could now afford the average first-time buyer property, it has found. This compares with only 6% of districts in 2007, the year in which house prices reaced a peak in the UK.

The lender attributes this improved affordability to lower interest rates combined with the reduction in house prices since 2007.

However, tighter lending criteria imposed by many banks are still holding back many would-be first-time buyers, with deposits of 25% typically demanded from those buying their first home.

The North-east of England has seen the biggest improvements in affordability, but in London average earners cannot yet afford the average first-time buyer property in a single local authority area.