Buying a home in the UK has become marginally more affordable in 2024, as wages outpaced house prices and mortgage costs, according to Halifax, the country's largest mortgage lender.

Halifax, part of Lloyds Banking Group, reported that the average house price in the third quarter of 2024 was 6.55 times the average annual full-time income. This marks an improvement from 6.62 in 2023 and a record high of 7.24 in mid-2022.

The burden of servicing a new mortgage also eased, dropping to its lowest level in over two years. On average, mortgage payments accounted for 29% of income, down from 33% the previous year. This calculation is based on a 30-year mortgage term, a five-year fixed interest rate, and a 25% deposit.

“While affordability has improved, the progress remains modest,” said Amanda Bryden, head of mortgages at Halifax. “Buying a property continues to be a significant challenge for many, with prices still near record highs and interest rates expected to remain higher than what we’ve seen in the past decade.”

The Bank of England raised interest rates to a 15-year high of 5.25% in August 2023. However, rates began to decrease in August 2024, followed by another reduction to 4.75% this month. According to a recent Reuters poll, economists expect the BoE to lower rates further to 3.75% by the end of 2025. Meanwhile, house prices are forecast to rise by 3.1% in 2025 and 4% in 2026.

Halifax revealed that the average house price in Q3 2024 stood at £292,508 ($368,823), virtually unchanged over the past two years. However, regional variations remain significant. Housing is least affordable in Southeast England and London, where new mortgages require 39% and 36% of local incomes, respectively. Conversely, affordability is highest in Northeast England (19%), Scotland, and Northern Ireland (22%).