Housing affordability in England has worsened significantly, new figures show

Housing affordability in England worsened significantly last year as property prices increased faster than wages, new official figures show.

It means that buying an average home now costs someone in full time work some 7.8 times their salary, according to a new report from the Office for National Statistics (ONS).

The data shows that affordability worsened in 69 local authorities in England and Wales over the last five years, with over three quarters of these being in London, the South East and the East.

The report also reveals that the cost of buying a new home is considerably greater than buying an existing property. New homes typically cost 9.7 times wages, whereas existing homes cost 7.6 times full time pay.

Overall, Kensington and Chelsea in London was the least affordable area in 2017, with properties costing 40.1 times wages while Copeland in the North West of England was the most affordable area, with median house prices costing just 2.7 times median earnings.

The biggest decline in housing affordability in 2017 was in the East of England, where house prices rose 10% but wages increased by just 2%. Homes in the area cost nine times earnings on average.

It was followed by the South East, where house prices rose by 6.9% but local wages increased by 1.8%, meaning homes now cost 10.3 times earnings. London saw the joint biggest wage increase of 2.9% but house prices rose by a lesser 5.8%.

There were no significant changes in the ratio of median house prices to median annual earnings in Wales between 2016 and 2017. The latest year that the affordability ratio was significantly different from 2017 in Wales, is in 2007, therefore, affordability has only significantly changed over a 10 year period.

In England, house price growth was greater than earnings growth between 2016 and 2017, and in Wales, earnings growth was greater than house price growth. These changes have led to housing becoming less affordable in England and more affordable in Wales. However, the change was not significant for Wales between 2016 and 2017.

In 2017, detached properties were the least affordable in both England and Wales, whereas terraced properties were the most affordable while housing was significantly less affordable in England than in Wales for all property types.

The affordability ratio has more than doubled for every property type in England from 1997 to 2017, but that was not the case in Wales. Housing affordability for all property types has worsened at a quicker rate in England than in Wales.

Flats and maisonettes have had the largest change in affordability over time in both England and Wales, but the increase was larger in England at 141.5% than in Wales at 85.8%. The report ay this is likely to reflect the influence of increasing prices for flats in London, which has driven the larger increase in England overall.

The affordability of terraced properties has seen the second largest change in England, but has seen the smallest change in Wales. This is because the increase in the median price paid for terraced properties in Wales at 201.4% is smaller than the increase for terraced properties in England at 283.1%, between 1997 and 2017.


Kindly shared by Property Wire