House prices outpace income growth to hit affordability

House prices outpace income growth to hit affordability

0:03 AM, 11th December 2024, About 12 hours ago

Text Size

While the UK’s house prices continue to rise, income growth has lagged, making homeownership a distant dream for many, data from the Office for National Statistics (ONS) shows.

Using figures for the financial year end of 2023, the issue of buyer affordability in England is particularly dire, it reveals.

That’s when the average house price was £298,000, and the average disposable household income was £35,000.

This translates to a ratio of 8.6, meaning it would take an English household 8.6 years of income to afford an average-priced home.

Signs of better affordability

Wales, Scotland and Northern Ireland showed some signs of better affordability, with ratios of 5.8, 5.6 and 5.0 respectively.

However, even in these regions, the gap between income and house prices remains significant.

The report highlights a long-standing trend that has happened since the data collection began.

The ONS figures show that house prices in England have risen twice as fast as household incomes.

This trend is also true – to a lesser extent – in Wales and Scotland.

Alarming for low-income household

However, the situation is most alarming for low-income households where the average-priced home remains ‘unaffordable’.

It will take a household more than five years of income to purchase.

Only the top 10% of earners in England have the financial means to buy an average-priced home within a five-year timeframe.

In Wales, Scotland and Northern Ireland, the threshold for affordability is slightly lower.

Prime example of unaffordability

The affordability issue varies dramatically across regions within England.

London stands out as a prime example of unaffordability, with no income bracket able to purchase an average-priced home.

Three other regions offer similar challenges, with only the top earners having access to homeownership.

The ONS report is a broad indicator. it says, and that factors like mortgage rates, shared equity schemes and income variation can influence the cost of homeownership.


Share This Article


Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More