Regional divergence widens as affordability conditions deteriorate in Q2
First-time buyers in northern cities stand to lose as much as £8,139 by delaying a home purchase by one year, while their counterparts in the South face a short-term financial disadvantage of £2,757 in their first year of ownership, according to Tembo's latest First-Time Buyer Index.
The quarterly index draws on proprietary data alongside official market statistics to compare the financial position of someone buying today against someone who continues renting and invests their deposit for a further year. The model accounts for rental costs, mortgage repayments, equity built through capital repayment, projected house price movements, and investment returns on the deposit.
Having recorded its most favourable conditions for first-time buyers in over two years during Q1 2026, the market reversed course in Q2 as house prices and mortgage rates rose. Tembo's First-Time Buyer Attractiveness Score fell from 637 to 598, moving from the "high" to "moderate" category.
Although buyer choice increased in nearly every city analysed — Brighton being the exception — higher purchase prices, larger deposits, and elevated interest rates offset those gains. House prices rose in 14 of the 21 cities covered by the index, while both deposits and loan-to-income ratios increased in 70% of cities.
In many northern cities, relatively affordable house prices allow buyers to build equity from the outset while benefiting from price growth and sidestepping rising rents. Across much of the South, higher deposits and mortgage costs have reduced those early financial advantages, weakening the short-term case for buying. Over the longer term, however, home ownership continues to deliver greater wealth accumulation than renting in southern cities.
The findings arrive as debate over a potential shift from council tax to a land value tax has drawn renewed attention to the regional costs of ownership — though Tembo's data suggests the financial incentives for first-time buyers already vary considerably across the UK, ahead of any such reform.
North vs South: first-time buyer finances
Tembo First-Time Buyer Index — Q2 2026
| Metric | North | South | Difference |
|---|---|---|---|
| Average deposit | £41,202 | £76,450 | 85% |
| Average sold price | £187,285 | £347,500 | 85% |
| Average monthly repayment | £780 | £1,448 | 85% |
| Average salary | £37,826 | £43,329 | 15% |
| Average LTI | 3.85x | 6.13x | 59% |
| Benefit of owning — year 1 | +£8,139 | −£2,757 | −134% |
| Benefit of owning — year 5 | +£61,621 | +£58,141 | −6% |
"Much of the current debate around regional inequality starts from the assumption that the North is always at a disadvantage – our data tells a more nuanced story," said Richard Dana (pictured right), chief executive and co-founder of Tembo.
"For first-time buyers, many northern cities now offer a far stronger route into home ownership than London and much of the South, allowing buyers to begin building wealth much earlier. That's a reminder that when we talk about regional opportunity, housing has to be part of the conversation.
"In the country's most expensive markets in the South of England, particularly London, the upfront cost of buying has become so high that waiting can seem to make better financial sense in the short term. That doesn't mean home ownership is no longer worth pursuing. In fact, over the longer term, it still remains one of the most effective ways to build wealth. But it does underline how uneven the market has become and why first-time buyers increasingly need advice that reflects the realities of where they live, rather than a one-size-fits-all message."
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