The average home sold in England now costs 8.7 times the average annual disposable income, with affordability ratios in England now worse than at any point since records began in 1999.
The latest ‘housing purchase affordability’ release published by the ONS looked at the distributions of house prices and household income, indicating how affordable, on average, a range of homes are across Great Britain for the financial year ending 31 March 2021.
Purchase affordability ratios for the average home are below their peaks in Wales (2007) and Scotland (2008), with the average home in Wales now costing six times the average disposable income, while in Scotland it is 5.5 times the average disposable income.
Industry experts have described the situation as a crisis, with many pointing to the fact that it does not look set to improve in the short to medium term due to low wage growth, rising inflation and low housing supply.
The mortgage comparison platform Dashly.com’s founder, Ross Boyd, said while affordability rations were bad around the UK, they were "diabolical" in England.
“As for London, the capital is in a different dimension altogether when it comes to affordability. For low-priced homes to be available at five times a higher disposable household income is a farce. For the average person seeking to get onto the property ladder in the capital, it's like climbing 10 Everests,” Boyd said.
Across English regions, an average-priced home in the north east costs the equivalent of almost 12 years of income for a low-income household compared with 40 years in London.
The North East is the most affordable English region and there low-price homes are available at around five times a low (10th percentile or higher) disposable household income.
While in London, low-priced homes (10th percentile) are available at five times an 80th percentile or higher disposable household income.
Responding to the figures Andrew Montlake, managing director of mortgage broker Coreco, said the UK’s property market was “broken” due to a lack of new homes being built and salaries “rising nowhere near the rate of house prices”.
“In many areas of the country, the UK’s property market is starting to resemble a science fiction novel,” Montlake said.
“With threadbare stock levels and a shambolic lack of homes being built, affordability ratios were already borderline fictional for many. But with inflation and rates now rising, affordability is rapidly entering the realm of fantasy.”