The typical
first-time buyer home in Medway costs £274,369,
which is a lot of money in anyone’s book.
For years, the
housing affordability debate has been framed in terms of house prices
compared to average incomes. That makes a neat headline, but it isn’t
how first-time buyers think. When you are weighing up your first home
in Medway, the question isn’t “how many times my salary is the
house worth?”. It’s “what slice of our take-home pay will the
mortgage swallow each month?”
Looked at through
that lens, the story for Medway first-time buyers is very different
from the doom and gloom you often read. Yes, it is tough today, as
mortgage payments take 44.3%
of a Medway first-time buyer’s household income.
Yet, history shows
there were periods when it was far tougher.
The
late 1980s squeeze
Cast your mind back
to the late 1980s. House prices were much lower in pound note terms,
but interest rates were a punishing 14.4%. In 1989, first-time buyers
in Medway were handing
over
70.7% of their household income
to cover mortgage payments (the national average was 47.2%). It was
brutal.
The point is
simple, Medway house prices were much lower at £61,924 in 1989, but
the mortgage burden was far higher. Affordability, in the truest
sense, was worse than today.
2007:
déjà vu for new Medway first-time buyers
Fast-forward to the
eve of the financial crisis. In 2007, first-time buyers in Medway had
to commit 48.1%
of their household income to
their mortgage. Sound familiar? Another peak, another squeeze (the
national average was 44.2%).
That number matters
because it indicates that even in relatively recent history,
affordability was worse than it is now. Today’s first-time buyers
often tell the older generation that “it was easier in your day.”
The numbers tell a completely different story.
The
2023 peak
Now, let’s talk
about the recent pain. In 2023, the affordability rate in Medway
reached 49.0%
of the household income.
That was the highest in over 15 years. Mortgage costs soared on the
back of rising interest rates, and many first-time buyers put their
plans on ice (the national average was 37.4%).
Yet, and this is
crucial, even at the 2023 peak, it was 30.7% more affordable than the
late 1980s.
A
glimmer of relief for Medway first-time buyers
Since 2023, the
burden for Medway first-time buyers has started to ease. In 2024, the
rate dropped to 45.7%,
and by 2025, it had decreased to 44.3%.
Still heavy, still demanding discipline, but trending in the right
direction.
This shift tells us
two things. First, the market is not static as the environment for
first-time buyers moves year to year. Second, affordability must be
measured not just in pounds on a price tag but as a living, breathing
percentage of real household income.
The
role of wages and inflation
The
average UK home today is £34,000
cheaper than it was in 2022,
once
adjusted for inflation.
At
first glance, that sounds impossible. Let me explain.
The
average value of a UK home in 2022 was around £270,000.
However,
in the last three years there has been inflation of 11.45%.
Therefore, a British home that cost £270,000 in 2022 would need to
be worth £304,400
in today’s money to
stand still regarding inflation (to have the same spending power).
The average UK house price today is £270,400 (just £400 more – or
0.15% more). That gap means the “real” value of a home has
dropped by 11.3% – (i.e.
11.45% inflation less 0.15% house price growth makes 11.3%).
Put
another way, UK homes are effectively 11.3% or £34,000 cheaper.
At
the same time, UK
headline wages are 16.28% higher since 2022. Take inflation off that
wage rise (16.28% wage growth less 11.45% inflation) and real
‘after inflation’ wages
are
4.83% higher since 2022. So while headline house prices in headline
(nominal) terms have flatlined, buyers’ actual spending power has
strengthened.
That
combination is rare. Properties are 11.3% cheaper in real terms, and
incomes are 4.83% higher in real terms. Add to that the fact that
interest rates, while still not at the levels seen in the 2010s (and
they never will be again), rates are beginning to edge down, and more
homes are coming onto the market, and the balance has shifted. Buyers
now have more choice, and crucially, more negotiating power.
This
wider backdrop matters. Inflation has taken a significant bite out of
family budgets, but unlike the late 1980s, wages have also been
rising. That is why the proportion of income going on mortgage
payments hasn’t rocketed back to the eyewatering levels we saw a
generation ago.
Why
the headline asking price of homes distracts us
A Medway starter
home today looks eyewatering when you compare it with salaries. But
the raw multiple of income to house price is a misleading way to
judge affordability. What matters is whether the monthly mortgage
outgoings are sustainable.
This perspective
also explains why so many buyers do eventually take the plunge. A
£250,000 headline asking price with a £237,000 mortgage may seem
daunting, but a monthly payment of £1,240, once wages are factored
in, can feel more achievable.
Peaks
and troughs in perspective
History shows the
journey is cyclical. There are peaks, there are troughs, and
affordability is always more nuanced than the headlines suggest.
Final
thought
Buying your first
home in Medway will never be “easy.” It takes saving,
sacrifice, and the courage to make a commitment. But don’t fall for
the myth that it is uniquely impossible today. Previous generations
faced even harsher affordability barriers, yet they still managed to
climb the ladder.
Does this surprise
you? Whether you are a parent advising your grown-up children or a
first-time buyer yourself, the choice ultimately rests with you. Do
you buy now, or wait? Tell us your stories and thoughts on when you
purchased your Medway house, and what your first monthly mortgage
payments were.