Home buyers in England and Wales pay 7.6 times earnings for a home

On average people paid around 7.6 times their annual earnings on buying a home in England and Wales in 2016, up from 3.6 times earnings in 1997, the latest data shows.

The median price paid for residential property in England and Wales increased by 259% between 1997 and 2016 while median individual annual earnings increased by 68% in the same time period, according to the figures from the Office of National Statistics (ONS).

The most affordable local authority in 2016 was Copeland, with house prices being on average 2.8 times greater than annual earnings, whereas Kensington and Chelsea was the least affordable with house prices being 38.5 times greater than annual earnings.

The gap between the least affordable and most affordable parts of England and Wales has increased over the last two decades and housing affordability has worsened in all local authority districts.

The ONS report also shows that housing affordability has worsened fastest in London boroughs over the last two decades.

Shaun Church, director of mortgage brokers Private Finance, said that the figures mean it is getting harder to get on the housing market. ‘Limited access to mortgages at more than 4.5 times borrowers’ income means that, with the average house prices now 7.6 times greater than average earnings, means growing numbers have found themselves excluded from the property market,’ he explained.

‘But fortunately, low interest rates and mortgage repayments have gone some way to ease the pressures they face but younger would-be buyers are the biggest losers from the growing imbalance between house prices and earnings,’ he added.

He also pointed out that in London boroughs such as Kensington and Chelsea the typical house price is now 38.5 times bigger than the average income, which puts getting a foot on the ladder out of reach of all but the wealthiest buyers.

‘Such an imbalanced situation creates obvious temptations for policymakers to interfere with the market. However, it is absolutely imperative that they avoid destabilising the housing market for political ends, as was the case with the changes to stamp duty last year,’ he concluded.

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