Home-owning dream fades as affordability hits all-time low in England – Wales and Scotland also struggle
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, comments on the publication of the ONS Housing Purchase Affordability, which shows home-owning dream fades as affordability hits all-time low in England, as Wales and Scotland also struggle.
Key points from publication:
- In the financial year ending 31 March 2021, the average home sold in England cost the equivalent of 8.7 times the average annual disposable household income.
- In Wales the ratio was 6.0, and in Scotland it was 5.5.
- Purchase affordability ratios for the average home are below their peaks in Wales (2007) and Scotland (2008).
- Affordability ratios in England are worse than at any point since the series began in 1999.
- Across English regions, an average-priced home in the North East cost the equivalent of almost 12 years of income for a low-income household.
- This compares with 40 years in London.
Helen Morrissey says:
“The dream of owning your own home is rapidly disappearing with the average home sold in England costing the equivalent of 8.7 times annual disposable income. The picture is also challenging in Wales and Scotland though they have at least not breached the limits seen in 2007-08.
“These figures were taken up until March 2021, but the market has continued to race away since then with wages nowhere near keeping up. There may be early signs the housing market is starting to cool but the reality is it is becoming beyond many people’s reach.
“The data also looks at affordability for different income groups – for instance how easy would it be for someone on a low-income to buy an average priced home in their area. The picture is particularly gloomy in London with the average price home costing the equivalent of 40 years of income for a low-income household.
“In England someone on a low income looking to buy a lower priced home still needs to stump up 8.49 times their annual income to do so. The situation is a little better in Wales and Scotland with someone on a low income needing to find 6.18 and 4.82 times of their income respectively – this is still an enormous challenge.
“The situation will become more challenging still as interest rates have been on the increase, pushing up mortgage costs. This, along with the cost-of-living crisis continuing to bite huge chunks out of our income, will further affect affordability in the coming years.”
Kindly shared by Hargreaves Lansdown
Main article photo courtesy of Pixabay
