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Housing affordability in England lowest since records began

Paloma Kubiak
Written By:
Paloma Kubiak

The average home in England costs around 8.7 times the average annual disposable household income, the highest income to house price ratio since 1999.

According to the Office for National Statistics (ONS), the figure is based off £275,000 as the median house price and £31,800 for the median income.

The ONS said this affordability ratio for England is worse than at any point since the series began in 1999, when the housing affordability ratio stood at 4.4.

The report revealed that in Wales the affordability ratio was six and in Scotland it was 5.5.

It noted that these were below the peaks of 2007 for Wales and 2008 for Scotland.

The ONS explained that following the financial crisis, housing affordability had worsened in England, Scotland and Wales but since 2014, England’s ratios had increased and had led to a bigger affordability gap between England and the other countries.

The report stated that in all three countries, the affordability of low income households varied more over time than those of average or high income households.

It said an average price home in the North East cost around 12 years of income for a low income household, compared to 40 years for a low income household in London.

The South West, South East, East of England and London had generally worse affordability than average for England.

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “In recent times, a pandemic induced slowdown in housebuilding and wages that haven’t kept pace with house prices growth, fuelled by supply and demand mismatch, has exacerbated affordability pressures.

“The decline in housing affordability depicts a property market that has become increasingly difficult for first-time buyers to access. Soaring house prices, rising mortgage rates and the cost-of-living squeeze has forced many to give up their dream of homeownership – at least for the time being. The Bank of Mum and Dad is also facing its own cost-of-living challenges and can’t be relied on to provide much needed financial support.

“While the current pace of price appreciation doesn’t appear sustainable over the long run, would-be buyers shouldn’t hold their breath for a house market crash to ease the affordability squeeze. The evidence points to house prices dampening rather than tumbling as laws of supply and demand will continue to prevail.”