First-time buyers about to hit the two-salary ceiling – warns Twenty7tec 

Is the nation about to hit the two-salary ceiling? That’s the question raised by Twenty7tec after new data revealed that more than half of first-time buyers (59%) earn below £60,000.

The leading mortgage data and technology firm believes that home ownership is slipping further out of reach for ordinary working households. With affordability criteria stretching buyers to their limits and the national average wage standing at around £37800, double-income households are now feeling the pressure. 

Now, the market is facing a new challenge: what happens when even two incomes aren’t enough?

Nakita Moss, Head of Lender from Twenty7tec said: “Increasingly, the answer is found not in higher earnings, but in outside help. 

“Many first-time buyers are on modest incomes, even as they reach their late 30s, which leaves very little room for error when it comes to affordability. This has led to  people having to wait longer to save a deposit, often skipping smaller flats and moving straight into family-sized homes as they juggle career progression with starting families. From this, advisers are having to reassess how they guide clients on long-term affordability and risk.”

While the average UK property price now sits around £290,000, wage growth has failed to keep pace with rising living costs and strict lending conditions. Even with a joint income of £60,000, first-time buyers are typically limited to a mortgage of around £270,000, requiring a deposit of roughly £30,000 just to reach the national average purchase price.

Regional house price variation is also adding to the challenge. In the South East, average property prices have climbed above £440,000, pricing many buyers out completely. However, advisers are seeing prices in cities such as Leeds and Manchester rise sharply, fuelled by increased investment and a wave of people relocating from London to take advantage of lower prices in the years following the pandemic. 

Despite average values remaining closer to £250,000 and £260,000 respectively today, more affluent areas are now reaching premium levels, with family homes regularly selling for well above £400,000. 

This widening gap is reshaping where and how people can buy and, although government measures such as stamp duty relief for first-time buyers have offered short-term support, they have done little to tackle the core issue of affordability –  particularly since the nil-rate threshold for first-time buyers was reduced from £425,000 to £300,000 earlier this year.

Nakita added: “When considering each of these factors, we predict that those stuck in “Generation Rent” will choose unconventional methods to get on the ladder. We are already seeing a steady rise in group mortgages, with friends or family members buying together, as well as intergenerational households and co-ownership living models.

“Our data also shows that around one in seven first-time buyers (15.4%) are now aged over 40, while the number of those aged 51 and over purchasing their first home has risen by 80% in the last five years. 

“Longer-term lending is no longer a niche product but an essential tool, with many mortgages now stretching well into retirement. For advisers, it means adapting conversations with clients, helping them think not just about getting onto the ladder but about sustaining affordability throughout the lifetime of the loan.

“What concerns us, is that if the two-salary ceiling becomes the new normal, what other implications can this mean for buyers, especially second steppers and those looking to buy in later life? One thing is for sure, the traditional path to home ownership is being redefined and without intervention, could we see an entire generation priced out of home ownership altogether?”