The UK housing market

Mortgages

Understand how rising house prices affect affordability and why most buyers rely on a mortgage to get onto the property ladder.

In the UK, house prices have seen significant long-term growth since the nineteenfifties. This has outstripped the growth of people’s earnings, which means houses have become less affordable over the last few decades.

This trend is called the increase in the house price to earnings ratio. This means it has become more difficult to buy a home based on your income.

House prices rise and fall with changes in interest rates and the economy. Rising prices increase the value of homes, but make it harder for buyers to get on the ladder. For people selling and buying at the same time, the benefit is limited, as higher prices can make both selling and moving more difficult.

The screen shows the current average salary and average house price in the UK.

Imagine you’re earning £37,000 a year. If you manage to save 20% of that income, that’s about £7400 saved each year.

Now, let’s say the average UK house price was £290,000. If you divide £290,000 by £7,400, you get just over 39 years.

That means if you wanted to buy a house outright, with no mortgage, it would take you nearly four decades of saving. And that’s before prices rise further. This is why most people use a mortgage, because saving the full amount in cash simply isn’t realistic for most buyers.

Rising house prices mean the average first-time buyer is now in their thirties. Many first-time buyers are still teaming up to make the numbers work.

For serving personnel, decisions about buying may also be influenced by postings, accommodation entitlement, and whether you plan to settle in one location long-term. There is also information specifically for partners of armed forces personnel overseas. You can find this on gov.uk.

Everyone’s financial situation is different. Some will earn a lot more than the average. Some will have help from family members or inherit money that helps them buy a home. We talk more about this, and help from family members, in our video on deposits.

So while buying a home can feel like a big challenge, it’s not impossible, regardless of the housing market you find yourself in. With the right planning, support and understanding of your options, many people do take that first step onto the property ladder.

All Armed Forces Modules

Budgeting

Module 1

5 videos

22 minutes

In this module, you’ll learn how to build a budget that helps you stay in control of rising costs, plan ahead and manage your money with confidence.

Earnings

Module 2

7 videos

30 minutes

In this module, you’ll learn how to understand your pay, spot any issues early and explore the different ways you can increase your income.

Pensions

Module 3

10 videos

61 minutes

In this module, you’ll understand how pensions work, including the Armed Forces Pension Scheme, so you can plan confidently for later life.

Managing debt

Module 4

7 videos

34 minutes

In this module, you’ll learn how borrowing works, what to consider before taking on debt and how to manage repayments.

Credit options

Module 5

6 videos

37 minutes

In this module, you’ll learn how credit works, what affects your credit score and how to make borrowing choices that support your financial goals.

Mortgages

Module 6

9 videos

47 minutes

In this module, you’ll learn how home buying works, the factors that shape affordability and how different mortgage options can affect your choices.

Investing

Module 7

8 videos

40 minutes

In this module, you’ll learn how investing helps your money grow over time, how it differs from saving and how to make informed investment decisions.