The First-Time Buyer index: where does your money go furthest?

For those looking to get onto the property ladder, the past few years have been challenging, with higher mortgage rates, rising living costs, and political uncertainty reshaping the housing market. At the same time, recent changes aimed at strengthening renters’ rights have renewed the debate over whether renting or buying is the better option. As affordability continues to vary significantly across the country, an important question remains: is it more financially beneficial to rent or buy in different parts of the UK?

Analysis of Office for National Statistics (ONS) first-time buyer figures revealed that the average price of homes for those getting on the property ladder is around £ 261,700, compared to average rents for a three-bed property across the UK, which are around £1,269 per month.

For those fortunate enough to be in a position to buy, the next question is where you’ll get the best value for money. Using ONS data on first-time buyer costs and rental prices, we analysed locations across the UK to identify where purchasing a property could be more cost-effective than renting, creating the first-time buyer index.

The top locations for first-time buyers, saving up to £327 a month

Considering property prices, rental costs, mortgage affordability and median earnings, we have created an index highlighting the best locations for first-time buyers across the UK.

Middlesbrough ranked as the top location, scoring highly thanks to its lower-than-average house prices of £123,831, resulting in more affordable mortgage payments of around £607 per month. The area also performed strongly in terms of affordability, with local earnings showing a more favourable balance relative to property prices, helping buyers build towards a deposit more quickly.

Burnley ranked second, offering the lowest average deposit requirement across the index (£11,595) and providing a more accessible route onto the property ladder. Buyers in the area could also save more than £100 per month compared with renting. Merthyr Tydfil in Wales completed the top three, ranking highly due to the affordability of local property prices when compared with average earnings.

Five regions feature across the index’s top 10, giving first-time buyers a range of options throughout England and Wales. The North East, North West, Wales, South East, and West Midlands all have areas sitting below the national first-time buyer average property price. Even the priciest entries on the list (Southampton and Gosport at around £207,000) come in 21% below that national figure.

Nine of the ten areas have mortgages cheaper than local rent. Rugby is the only exception, where renting is £44 a month cheaper – though the area has exceptionally high earnings (over £41,000) and a low house price-to-earnings ratio, meaning it keeps its place in the top 10 for first-time buyers to consider purchasing.

Out of the top 10, Southampton generates the largest annual saving of any area – £3,924 a year, or £327 a month.

The North sees the best areas for first-time buyers to get onto the property ladder

The North East region was ranked as the best location to purchase as a first-time buyer; in fact, the North as a whole performed well across the whole index, offering smaller house prices and easier deposits for prospective house buyers to save for. 13 out of the top 20 areas were from the North West or North East. For those looking to get onto the property ladder, it may be worth considering northern areas to make your purchase and see your money go further.

While Middlesbrough and Burnley ranked first and second, other locations such as Cumberland, County Durham and Hyndburn all offered affordable housing solutions, with earnings and house prices working comparatively to help prospective buyers.

Every single area in the North East except one (Northumberland) has a cheaper monthly mortgage than local rent. That’s the best region overall for buying instead of renting. The average mortgage across the region is just £699 a month, compared with a national average of £1,310, with the average property price just under £143,000. In County Durham, Middlesbrough and Hartlepool, a mortgage takes up just 24% of monthly earnings.

69% of areas in the North West, including Burnley, Hyndburn, Blackpool and Liverpool, have mortgages cheaper than local rent. However, some expensive areas remain in the region, including Cheshire East, Ribble Valley, Trafford, Stockport, and Warrington. Trafford, for example, has an average price of £306,330. So, for those wanting to buy in the North West, it’s best to research different areas to save money.

Manchester and Salford are amongst the surprising areas in the region to save. Despite relatively high average house prices (£232,888 and £204,756, respectively), both cities generate over £3,000 a year in savings by switching from renting to buying because city centre rents are so elevated. Manchester’s average rent is £1,406 a month – but the mortgage is only £1,142.

Burnley, Hartlepool, Hull and Blaenau Gwent offer some of the cheapest house prices regionally

When analysing the cheapest first-time buyer home across England and Wales, there are plenty of options below the ONS average of £261,700; 187 locations had an average price below the UK average.

Four different regions ranked in the top 10, with Burnley accounting for the cheapest average starter home. Other areas to consider include Hartlepool in the North East, Kingston upon Hull in Yorkshire and Blaenau Gwent in Wales, all of which offer great value for money for those looking to get their foot on the ladder.

Although the market can seem daunting for prospective buyers, the study shows that 41% of areas across the UK are better to buy in than to rent, with an extra 94 locations costing less than £100 a month to own a home, thus saving on rent overall. The analysis highlights areas across the UK, both in the North and the South, that can give aspiring homeowners confidence that, with some research, they can make their money go further when purchasing their first property.

Wherever you’re looking to buy a property, the right support can make all the difference, which is where the value of mortgage brokers really shines. From understanding mortgage options to navigating the purchasing process, explore the right mortgage broker for you, as they can provide vital education on products and help make the process easier.