Affordability at an 11-year best: What it means for buyers and sellers right now
Research published by Lloyds on 2 October 2026 found that the UK’s average house price to income ratio has fallen to 7.3, down from 7.6 a year ago, its lowest level since 2015. The shift reflects a period in which wages have grown considerably faster than house prices: average earnings rose 4.5% over the past year to £40,790, while the average property price increased just 0.5% to £299,131. For first-time buyers specifically, the ratio has improved further, with homes now costing just under six times average earnings, down from 6.1 to 5.9.
The context matters as much as the headline number. This is a meaningful structural improvement in affordability, and it has arrived in a way that is genuinely different from previous periods of apparent affordability improvement. The ratio is falling because earnings are rising, not because prices are falling. That distinction shapes how buyers and sellers should interpret the figures.
What it means for buyers
The most direct implication is that more buyers can now reach a wider range of properties on a given income than at any point since 2015. For a household earning £40,000 a year, a ratio of 7.3 translates to a different absolute price ceiling than a ratio of 7.6, and at average income levels the difference across a year of earnings growth is material. The improvement has been most pronounced in regions that were previously least affordable, where the ratio has fallen the furthest.
However, the ratio improvement and the actual experience of buying are not the same thing. Lloyds’ research also records that the average monthly mortgage repayment has risen over the past year, from £1,100 to £1,157. That £57 monthly increase reflects the impact of higher mortgage rates on actual payments, which partially offsets the ratio improvement. A buyer whose purchasing power has stretched relative to prices is still servicing a larger monthly payment than a buyer in the same position a year ago. The ratio tells you about the structural position; the monthly payment tells you about the lived experience.
The deposit barrier continues to be the factor that separates buyers from the market more than the ongoing ratio. Lloyds flags saving for a deposit as one of the biggest hurdles, particularly for first-time buyers. With house prices still at an average approaching £300,000 nationally, even a 5% deposit requires significant accumulated savings, and the time that takes to build is what many buyers are navigating while the ratio moves in their favour.
What it means for sellers
The improvement in the house price to earnings ratio is a structural positive for the buyer pool. It means that more prospective buyers are in a position where a purchase is within structural reach compared to two or three years ago. That supports demand over time, and it is part of the reason the market has remained broadly stable rather than experiencing the sharper falls that some predicted when mortgage rates rose materially in 2023 and 2024.
For sellers operating in the current market, the practical implication is that the buyers competing for their property are in a better relative position than at any point in over a decade, even though higher mortgage rates mean their actual payments are elevated. That combination, stretched monthly payments against an improving structural position, produces a buyer who is motivated and in reach but also price-sensitive and doing careful affordability calculations. It is a market that rewards realistic pricing because buyers are doing the numbers carefully, not because they cannot afford to buy.
The regional picture
Lloyds’ research confirms that the traditionally least affordable regions have recorded some of the largest improvements in the ratio, while London and the South East remain the most expensive areas to buy relative to earnings. Scotland and northern England contain the most affordable local authorities in Britain. This reflects the sustained pattern in which earnings growth, applied to lower absolute house price bases in northern markets, has improved affordability faster in proportional terms than in southern markets where the absolute price level is higher.
For buyers considering where to purchase, the ratio data reinforces a consistent theme: affordability is materially better in northern and midland markets than in the South East, and the gap, while still present, has narrowed.
The eleven-year low in the house price to earnings ratio is a genuine and positive development for the market. The offsetting factor of higher mortgage payments means it has not produced a market surge. What it has produced is a buyer pool that is more capable of acting than at any recent point, against a backdrop of elevated but stable supply.
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