Homeowners in a third of UK areas earn more from bricks and mortar than they do from their day job, analysis by Halifax has revealed.
Average house prices have increased by more than total average employees’ net earnings in 31 per cent of local authority districts during the past two years - up from 28 per cent in 2015, according to Halifax.
London, the south-east, south-west and the east of England account for more than nine out of 10 areas in which house price gains are in excess of earnings, with the biggest gap in the London borough of Haringey.
House prices in Haringey rose by an average of £139,803 over the last two years, exceeding average take-home earnings in the area of £48,353 over the same period - a difference of £91,450, or £3,810 per month.
The two-year gap between wages and house price gains was more than £60,000 in Harrow, St Albans, Waltham Forest, Newham and Watford.
House Prices vs Earnings Top 10 over last two years
| Local Authority | Region | 2 Year Change In House Prices* £ | Net Median Earnings 2 Year (2015-2016)** £ | 2 Year £ Difference in House Prices v Earnings |
| Haringey | London | 139,803 | 48,353 | 91,450 |
| Harrow | London | 128,841 | 51,050 | 77,791 |
| St Albans | East of England | 131,645 | 58,651 | 72,995 |
| Waltham Forest | London | 111,076 | 47,430 | 63,646 |
| Newham | London | 107,302 | 43,719 | 63,583 |
| Watford | East of England | 113,704 | 51,133 | 62,571 |
| Slough | South East | 103,175 | 44,796 | 58,379 |
| Redbridge | London | 109,866 | 53,337 | 56,528 |
| Three Rivers | East of England | 106,135 | 49,985 | 56,151 |
| Hounslow | London | 101,940 | 47,281 | 54,659 |
Outside southern England, the difference between wages and gains in house price was markedly smaller, with South Northamptonshire (£33,514), Warwick (£21,240) and Trafford in Greater Manchester (£14,170) among those with the widest margins.
The only areas in which earnings were higher than price increases were the north-east, Scotland and Northern Ireland.
Over the past five years, 64 local areas in the UK (17 per cent of the total) have seen average house prices increase by more than total average pay.
Martin Ellis, housing economist at Halifax, said: “Buoyancy in the housing market over the past two to five years has resulted in homes increasing in value by more than total take-home earnings for the average homeowner in many areas, though mostly in southern England.
“While it is no longer unusual for houses to ‘earn’ more than the people living in them in some places, there are clearly local impacts.
"Homeowners in these areas can build up large levels of equity quickly, but for potential buyers whose wages have failed to keep pace, the cost of buying a home has become more unaffordable during that time.”
Ishaan Malhi, chief executive and founder of online mortgage broker Trussle, said: “Last month the government admitted that the housing market was ‘broken’ - sentiment that's been widely felt for some time, especially among hopeful first-time buyers.
“Limited housing supply and high demand has put homeownership beyond reach for many people, especially in London. Despite slower house price growth in recent months, the general trend has been that of unsustainable house price inflation.
“Sluggish wage growth is making the situation worse. In many areas, owning a property can earn you a greater annual salary than having a full-time job. This is creating a widening gulf between those who have managed to secure a mortgage and those stuck in the rental trap.”
simon.allin@ft.com
