Friday, August 19, 2022

Property affordability in UK falls slightly

There has been only a slight fall in property affordability in 2018, but there are huge regional variations, reveals ONS data

Property affordability in the UK has seen only a slight fall in 2018, however it varies hugely across regions, according to the Office for National Statistics (ONS).

Its latest property affordability data found that when buying a house in England and Wales, the typical full-time worker has to pay 7.8 times their annual salary. ONS said that the ratio had increased by 0.8% over the last year but noted huge regional variations in affordability for purchasers.

Copeland in the North West of England, remains the most affordable region, with average house prices around 2.5 times the typical annual earnings, while average house prices are 44.5 times the typical annual earnings in Kensington and Chelsea.

There is even a sharp difference in affordability ratio within the different areas of the capital, with a range of 34.7 between the most and least affordable areas.

According to the data, a total of 77 local authorities in England and Wales saw housing affordability worsen over the last five years, with around three-quarters of them located in London, the East or the South East.

There were no local authorities in which affordability was found to have significantly improved over the same time period.

In London just five boroughs did not see affordability worsen significantly: Hackney, Wandsworth, Harrow, Hounslow and Richmond Upon Thames.

Affordability is even more of a challenge if buyers are looking to purchase a new-build property.

The data revealed that buyers can expect to spend 9.6 times their earnings when buying a new home, compared to 7.6 times their salary when buying an existing home.

Director of Coreco, Andrew Montlake said that the figures were a particularly stark reminder of just how difficult it is for would-be buyers to get onto the housing ladder in London, adding, that affordability hasn’t improved in one single local authority is proof positive of how the lack of supply has propped up house prices despite ongoing market uncertainty.

Montlake also argued that while getting onto the ladder in certain regions was “eminently achievable”, in others, it bordered on the impossible for a significant chunk of the population.

Unless one has got a sizeable deposit and a pretty decent income, buying in the south east corner of the UK is little more than a pipe dream, he continued.

Director at Private Finance, Shaun Church said that while housing affordability may have remained relatively unchanged, mortgage affordability has improved considerably over the last year. The upfront cost of purchasing a home undeniably remains a significant financial hurdle for first time buyers to overcome, however thanks to falling mortgage rates, the ongoing cost of owning a home and servicing a mortgage is in fact more affordable than it was ten years ago.


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