The shortage of starter homes is driving up prices, exacerbating First Time Buyers’ struggle to get on the housing ladder.
The cost of the most affordable housing in England and Wales is rising more than three times as fast as the wider market in some areas, research by modular housing developer Project Etopia shows.
A lack of supply is widely believed to be the cause. Former housing minister Kit Malthouse recently admitted that the government had failed to build a single starter home of the 200,000 it promised in its 2015 manifesto.
In a blow to first-time buyers and those on low incomes, prices of entry level homes have risen 3.5 times quicker than the overall market in Copeland, Cumbria, over the past five years.
After Copeland, prices for the cheapest homes rose 2.5 times as fast as the average property market in Ceredigion, Wales, and Pendle and Burnley in Lancashire between 2014 and 2019.
This table shows the top 10 areas where the cost of the most affordable homes is increasing faster than the broader market (excludes London):
| Name | Entry level house price growth from 2014 to 2019 (%) |
Average house price growth from 2014 to 2019 (%) |
Difference in growth rates (%) |
| Copeland | 24.0% | 7.0% | 243.2% |
| Ceredigion | 22.2% | 8.7% | 155.8% |
| Pendle | 34.3% | 13.8% | 148.3% |
| Burnley | 48.0% | 20.7% | 131.8% |
| Northumberland | 13.8% | 6.0% | 131.7% |
| Allerdale | 7.7% | 3.6% | 116.4% |
| Uttlesford | 63.3% | 30.1% | 110.7% |
| Fylde | 20.7% | 10.6% | 95.0% |
| Windsor and Maidenhead | 45.7% | 25.1% | 81.9% |
| Epsom and Ewell | 51.0% | 28.5% | 79.1% |
Of the 314 places in the study, which excludes London, the price paid for the most affordable homes in Uttlesford, Essex, rose the most, increasing by 63.3% in five years.
It means the cost of the most affordable homes in Uttlesford have risen from £150,000 to £245,000 in five years. Over the same period, the price paid for the average home in Uttlesford rose by 30.1%, from £303,033 to £394,117.
Uttlesford was followed by Corby, Northamptonshire, and Three Rivers in Hertfordshire, where the price of the most affordable homes has risen 62.5%. By contrast, average property prices in those locations rose by 43.3% and 42.1% respectively.
The steep rise in price of affordable properties has been attributed to a lack of supply and strong demand for housing in these areas.
The Office for National Statistics’ most recent data shows the full-time workers can expect to pay 7.8 times their annual workplace-based earnings to buy a home in England and Wales3, up from 3.7 times in 1998.
Meanwhile, some areas have seen muted house price growth among the cheapest properties compared with the local market.
Only Redcar & Cleveland, and County Durham have seen the cost of the most affordable homes fall in the past five years.
Hartlepool, Conwy and Milton Keynes have seen the biggest gulf in price growth in first-time buyers’ favour.
This table shows the 10 areas where the cheapest homes have seen the most limited price growth compared to the rest of the local market.
| Name | Entry level house price growth from 2014 to 2019 (%) |
Average house price growth from 2014 to 2019 (%) |
Difference in growth rates (%) |
| Redcar and Cleveland | -1.7% | 1.4% | N/A |
| County Durham | -4.7% | 7.3% | N/A |
| Hartlepool | 2.2% | 6.5% | -65.6% |
| Conwy | 6.1% | 17.7% | -65.5% |
| Milton Keynes | 15.0% | 35.3% | -57.5% |
| West Lancashire | 9.0% | 19.9% | -54.9% |
| South Lakeland | 7.1% | 15.3% | -53.3% |
| Great Yarmouth | 15.6% | 30.6% | -48.9% |
| Weymouth and Portland | 8.7% | 15.4% | -43.4% |
| Monmouthshire | 22.9% | 38.7% | -40.8% |
Joseph Daniels, CEO of Project Etopia, said: “These damning figures show that years of sluggish housebuilding are harming first-time buyers and those on low incomes by forcing up the price of the most affordable homes.
“The result is a two-tier market that is completely out of sync with itself in some areas. In just five years, house prices for the cheapest homes have risen by more than 60% in some places, locking many people out of the housing market altogether. The ultimate solution to this problem will be greater supply of homes. The house building industry and policy makers must not take their eye off the ball.”
