UK house prices have outstripped wages in many parts of the UK
Despite the recent slowdown in house price growth in many parts of the UK, prices in one in five areas in the country have significantly outstripped wages over the past few years.
According to the latest figures from Halifax, London homes have ‘earned’ as much as £117,000 more than the people who live in them over the past five years. While average house prices in the north-west London borough of Barnet increased by £247,000 in five years, average earnings in the borough increased by £130,000 over the same period, meaning that Barnet homes ‘earned’ almost twice as much as their owners, figures revealed.
North London estate agent Jeremy Leaf said Barnet has a very good education record, which is a bit of a magnet for families. What that tends to mean is that it attracts young professionals but because it is a little bit better value for money than inner London areas and is greener, it also attracts older people who want to be near their grandchildren. Many of these people are asset rich but may not have big incomes and are often trading down from larger properties.
The research found that Barnet, Merton, in south-west London and Waltham Forest in north-east London were the three areas where average house prices surpassed take-home pay by more than £100,000 in the past five years.
Hertsmere in Hertfordshire was the only area outside London where house price growth exceeded wages by £71,000.
There were only two boroughs where high earners made more money than their properties over five years.
In Hammersmith and Fulham the average salary added up to £145,000 over five years, £67,000 more than house prices rose in the same period, while in Westminster five-year salaries reached £157,000 and homes ‘earned’ £53,000 less than their owners.
Managing director at Halifax, Russell Galley said that despite the slowdown in house price growth in southern England, it has still outpaced wages across most of the region. This means that middle earners are also facing a challenge getting on to the property ladder.
However, the Halifax data suggested that stabilising house prices and rising employment provide hope for buyers as the proportion of areas where house prices are outpacing earnings dropped from 31 per cent (or 119 areas) in 2016 to 18 per cent (71 areas) last year.
