Family home affordability improves, but higher mortgage rates limit gains

What happened

Family home affordability has improved in Britain, according to Zoopla figures reported on 15 October 2026, but buyers face higher mortgage costs. The property website said 51% of two- and three-bedroom houses for sale met its affordability test for a household on an average income. That compares with 45% a year earlier, an increase of six percentage points.

Zoopla based its calculation on a combined annual household income of £53,500, borrowing at 4.5 times gross income and a 20% deposit. On those assumptions, it put the maximum purchase price at about £301,000. The measure therefore describes homes within a modelled buying budget, rather than properties every household could secure a mortgage to purchase.

The South West recorded the biggest improvement over the year, with 47% of houses meeting the test. Zoopla reported a 10-point increase there, followed by a nine-point increase in the East of England. It attributed the stronger improvement across southern and eastern regions to rising incomes, more homes coming to market and prices that were flat or falling.

The regional gap nevertheless remained substantial, according to Zoopla. In the South East, 23% of two- and three-bedroom houses met the affordability threshold, while the average asking price was £375,000. London offered fewer than 100 houses of those sizes below £301,000, making it the least affordable market in the analysis.

The improvement has not translated into stronger sales activity, Zoopla said, with sales agreed running 9% below a year earlier. It reported average mortgage rates above 5%, compared with 4% at the start of 2026. Zoopla said uncertainty was affecting confidence and leaving prospective movers cautious despite the wider choice.

The background

Zoopla’s headline percentage covers two- and three-bedroom houses listed for sale in Britain. It is not a measure of every home, every property type or the whole UK, which also includes Northern Ireland. Buyers looking for flats or larger houses should not assume the same affordable share applies to their search.

The deposit assumption is particularly important for households comparing the findings with their own finances. At a £301,000 purchase price, a 20% deposit would be approximately £60,200, before other buying costs. A household with the income used by Zoopla but less cash available would not fit the same borrowing calculation.

An income multiple is also different from a mortgage offer. Lenders assess applicants’ circumstances, including their spending, existing commitments and the proposed mortgage term, rather than relying only on gross pay. The separate debate over high loan-to-income mortgage limits concerns lending rules, not a guarantee that an individual buyer can borrow a particular amount.

There are two distinct affordability questions: whether a buyer can fund the purchase and whether the monthly repayments fit their budget. A home can move within an income-based price threshold while higher interest rates make the mortgage harder to service. Zoopla’s findings illustrate that distinction, with a larger affordable share appearing alongside more expensive borrowing.

For renters hoping to buy, assembling a deposit is a separate challenge from passing an income test. Property Pulse UK’s reporting on rents above £1,400 outside London examines pressures on that side of household budgets. Zoopla’s purchase-price measure does not show how long a household would need to save the deposit it assumes.

Read moreBank of England base rate hold leaves borrowers facing mortgage uncertainty

What people are saying

Richard Donnell, Zoopla’s executive director, said incomes were growing faster than house prices, bringing more two- and three-bedroom houses within reach. His explanation centres on the relationship between earnings and prices, rather than a broad fall in property values. Prices do not have to decline for that relationship to improve if pay rises more quickly.

Donnell said higher mortgage rates were offsetting some of those gains by increasing the monthly cost of a new loan. He said the additional cost was greater in southern regions, where house prices were higher. That means the areas showing stronger improvements in the price-based measure can still present difficult repayment decisions.

Donnell said more than two-thirds of houses in northern England and Scotland were affordable to the average household under Zoopla’s approach. Zoopla said northern regions had recorded smaller improvements largely because a greater share of homes was already affordable. A smaller annual gain therefore does not necessarily indicate a more difficult market for buyers.

Donnell also said a wider selection of homes was strengthening buyers’ negotiating position and requiring sellers to take a more realistic approach to asking prices. That is an owner-occupier affordability assessment, rather than the rental-return measure covered in Property Pulse UK’s report on landlord buying patterns and yields. A property’s rental yield and its affordability for a household answer different questions.

What happens next

Donnell expects house prices to continue growing more slowly than incomes, which he said would further improve affordability. That is Zoopla’s forecast, not a confirmed outcome or a promise of lower asking prices. The outlook described in the report does not set a date by which a particular proportion of homes will become affordable.

Mortgage costs remain an important part of whether that forecast translates into a workable move. The rate available to an applicant depends on the mortgage and their circumstances, so Zoopla’s reported average is not a personal quote. Comparing repayments for the actual loan size and term provides a different check from comparing an asking price with the £301,000 benchmark.

For buyers using the figures to plan a search, the practical starting point is their own income, available deposit and likely borrowing limit. Other purchase costs, including legal work, surveys and any applicable property transaction tax, also need a budget. A 20% deposit does not represent the full amount of cash required to complete a purchase.

For sellers, Donnell’s assessment points to the importance of pricing against the alternatives buyers can view locally. The national affordable share does not establish the value of an individual house, and a listing price is not a completed sale price. Local comparable properties and the level of buyer interest remain more directly relevant to an asking-price decision.

Why this matters

Zoopla’s figures suggest more choice for households whose income and deposit match its assumptions, but the headline percentage is not a personal buying budget. A substantial deposit remains necessary, and higher mortgage rates can make repayments harder even when prices look more manageable against earnings. Buyers need to assess both the upfront cash and monthly commitment. Sellers face a market where, according to Zoopla, more competing listings make realistic asking prices increasingly important.