House prices more than seven times earnings

House prices more than seven times earnings

The average home in England and Wales now costs more than seven times average annual earnings, according to official data.

Figures from the Office for National Statistics (ONS) revealed working people could expect to pay around 7.6 times their annual earnings on purchasing a home in England and Wales in 2016 -  up from 3.6 times in 1997.

Housing affordability has worsened in all local authority (LA) districts, with the fastest decline witnessed in the London boroughs, which account for seven of the top 10 least affordable local authorities.

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

Shaun Church, director at London-based Private Finance, said: “Younger would-be buyers are the biggest losers from the growing imbalance between house prices and earnings. 

“The data reveals that in 1997 the average house price was just 3.6 times the average income, which would have been well within reach of a young couple looking to buy. 

“The same couple looking to buy today would face an uphill struggle, and many find now themselves looking to their parents for help with a deposit or to act as a mortgage guarantor.

“Prices and incomes have grown particularly out of sync in the London market, and it isn’t surprising that seven of the country’s 10 least affordable areas are in the capital.

“In boroughs such as Kensington and Chelsea the typical house price is now a mammoth 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.”