House prices have become more affordable in relation to salaries, data from Lloyds Banking Group shows.
The average home now costs 7.3 times the average household income, down from 7.6 a year ago, Lloyds said.
The ratio has reached its lowest level since 2015, driven by slow house price growth.
Nationally, the average property price edged up 0.5 per cent in the past year, to £299,131, while average earnings increased by 4.5 per cent to £40,790, narrowing the gap.
For first-time buyers, homes now cost less than six times earnings, falling from 6.1 to 5.9.
Conventionally unaffordable regions have seen some of the largest improvements in house price to income ratio, though London and the south-east of England remain the most expensive places to buy.
Scotland and northern England feature many of Britain's most affordable local authorities, led by Inverclyde and Aberdeen, according to the research.
Where are the most affordable locations in each region?
At a local authority level, significant differences in house price affordability remain.
Many of the lowest house price to earnings ratios are found in Scotland and northern England. These are the locations where buyers are likely to get more for their money.
Inverclyde and Aberdeen in Scotland are the most affordable locations, with the average home costing 3.5 times earnings in both areas.
| Local area | Property price | Price to income ratio | |
| East Midlands | Mansfield | £183,032 | 4.9 |
| Malvern Hills | £328,261 | 8.8 | |
| Eastern England | Boston and South Holland | £181,885 | 4.5 |
| St Albans | £568,940 | 14.1 | |
| Greater London | Barking and Dagenham | £322,675 | 6.2 |
| Kensington and Chelsea | £895,893 | 17.3 | |
| North East | Middlesbrough | £139,678 | 3.9 |
| Northumberland | £230,176 | 6.4 | |
| North West | Blackpool | £141,550 | 3.6 |
| Trafford | £358,854 | 9.2 | |
| Scotland | Inverclyde | £146,030 | 3.5 |
| East Renfrewshire | £288,665 | 6.9 | |
| South East | Portsmouth | £216,713 | 5.2 |
| Elmbridge | £726,523 | 17.4 | |
| South West | Plymouth | £201,008 | 5.2 |
| Cotswolds | £403,153 | 10.3 | |
| Wales | Neath Port Talbot | £153,212 | 4.1 |
| Monmouthshire | £300,079 | 8 | |
| West Midlands | Stoke-on-Trent | £172,917 | 4.5 |
| Stratford-on-Avon | £347,085 | 8.9 | |
| Yorkshire and the Humber | Kingston upon Hull | £134,642 | 3.6 |
| York | £302,747 | 8.1 |
At the other end of the scale, Elmbridge in Surrey remained the least affordable local authority with a house price-to-income ratio of 17.4. Kensington and Chelsea in London followed at 17.3, while St Albans ranked third at 14.1.
Lloyds said: 'Several traditionally expensive areas recorded some of the largest improvements in affordability, including Westminster (London), where the ratio fell from 15.2 to 13.3; Cambridge (Eastern England), from 11.4 to 10.0; Elmbridge (South East), from 18.7 to 17.4; and New Forest (South East), from 10.1 to 8.7.'
Conversely, several more affordable areas saw their ratios increase. Rossendale recorded the largest increase from 4.8 to 5.4, while Wrexham in Wales increased from 4.9 to 5.5 and Halton from 5.1 to 5.6.
In Greater London, the most affordable location is Barking and Dagenham, with a house price to income ratio of 6.2 and an average property price of £322,675.
Buyers looking for a more affordable option in the south-east of England should consider Portsmouth, where the house price to income ratio is 5.2 and the average cost of a home is £216,713.
In the West Midlands, Stoke-on-Trent is an affordable option, with a house price to income ratio of 4.5 and an average property price of £172,917.
Asaam said: 'Where you buy continues to make a huge difference to affordability. Our recent research showed homebuyers can save 28 per cent on average by looking just next door to the UK’s priciest postcodes.'
Mortgage rates rising
The data will be of little comfort to buyers facing higher borrowing costs as mortgage rates increase.
Households are being hit with a fresh wave of mortgage rate hikes this week as lenders prepare for higher inflation and interest rates.
Higher interest rates mean average monthly mortgage repayments have increased from an average of £1,100 to £1,157 over the past year according to Lloyds.
The average first-time buyer mortgage payment now accounts for around 34 per cent of income, compared with 41 per cent for those renting.
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And in some parts of the UK potential buyers are still being kept out of the housing market due to house prices being much higher than average incomes.
Andrew Asaam, mortgages director at Lloyds, said: 'There are some encouraging signs for people looking to buy a home. Wages have continued to rise while house prices have remained relatively stable, helping to narrow the gap between earnings and house prices.
'However, affordability remains stretched for many households. Mortgage rates are higher than they were a year ago and saving for a deposit continues to be one of the biggest barriers facing first-time buyers.
'Buyers may have more options than they realise, including mortgages designed for those with smaller deposits.'
Ian Harris, president of NAEA Propertymark, said: 'While the narrowing gap between house prices and earnings is encouraging, affordability on paper does not always translate into affordability at the point of purchase.
'Buyers are still facing higher borrowing costs and the challenge of raising a deposit, with many having to compromise on property type, location or budget.'
Your First Home scheme set to more than double new-build options for solo first-time buyers
The number of available new-build homes in England affordable to an average single first-time buyer could more than double under the Your First Home scheme announced by the Government, an analysis by Rightmove shows.
Andy Burnham is launching a new scheme to try to help people 'who have given up hope of ever having a home to call their own' get on the property ladder.
The Your First Home scheme would be open to first-time buyers in England with a deposit of 2.5 per cent. It would provide them with a loan worth 20 per cent of their new build property's value to help pay for the purchase.
Rightmove said that the number of new-build homes affordable to the average solo first-time buyer could rise by 114 per cent, compared with buying using a standard 5 per cent deposit and 95 per cent mortgage.
The maximum purchase price affordable to an average solo buyer could rise by nearly £49,000, from £216,758 to £265,703 based on the national average wage, Rightmove added.
Buyers in the north west of England could have the greatest choice, with almost a third of currently available new-build homes potentially affordable to a solo first-time buyer under the scheme.
Alex Slater, Rightmove’s director of new homes, said: 'The combination of a smaller deposit and a 20 per cent equity loan could increase the maximum price an average solo buyer can afford by almost £50,000, while also reducing the amount they need to save upfront. This could bring thousands more currently available new-build homes within reach.
'The impact is likely to vary significantly between local markets. In some areas, the biggest benefit could be an increase from a very limited number of affordable homes today. In others, buyers could gain access to a much wider overall pool of properties.
'The final details announced at the Budget will be crucial, particularly any income and property price caps and regional variations. However, the early figures underline the potential for a well-targeted scheme to help more first-time buyers overcome both the deposit and borrowing barriers.'
Mortgage rates have shot up again due to inflation triggered by the conflict with Iran reversing hopes that the Bank of England would cut rates. This means those remortgaging or buying a home face higher costs.
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