Buying the average home in England and Wales would now cost a full-time worker 7.8 times their salary, official figures revealed today.
House prices continuing to rise faster than wages meant that ‘housing affordability significantly worsened’ in England last year, the Office for National Statistics said
The figures emerged in a report that laid bare the effect of two decades of house price inflation on workers’ ability to buy a home.
In 1997, a home in England and Wales cost 3.55 times earnings on average – and homes are more expensive now than at the peak of the pre-financial crisis property boom, when they cost 7.2 times earnings on average in 2007.
An interactive map included in the ONS report, which we feature above, allows people to look up how house prices compared to local wages have changed since 1997 in their area.
While the cost of buying a home got less affordable in England in 2017, the ONS said that there was no significant change in Wales last year.
The cost of purchasing a new-build is considerably greater than buying an existing property, figures showed. New homes typically cost 9.7 times wages, whereas existing homes cost 7.6 times full-time pay.
The report said: ‘Housing affordability has worsened significantly in 69 local authorities in England and Wales over the last five years, with over three-quarters of these being in London, the South East and the East.’
The ONS statistics compare house prices in local areas across England and Wales with workplace earnings for full-time employees in those areas.
The ONS figures reveal how median house prices across England and Wales compare to wages on average both nationally and locally. This chart shows how detached homes are most expensive at 11 times wages in England and just under nine times wages in Wales.
The figures revealed that Kensington and Chelsea was the least affordable area in 2017, with properties costing 40.1 times wages – no surprise considering the swathe of multi-million pound homes in the borough.
Copeland, in the North West of England, was the most affordable area, with median house prices costing just 2.7 times median earnings. However, this is skewed by the combination of relatively cheap housing in the area and high local wages due to the Sellafield nuclear power plant.
The ONS highlighted how high house prices do not necessarily translate to high local wages, with the median full-time earnings in the most expensive area Kensington and Chelsea standing at £31,950 compared to a median house price of £1,300,000.
The sparsely inhabited City of London, where most workers live elsewhere, had the highest median earnings of £56,288 and a median house price of £835,000.
In contrast, Copeland has the third highest median full-time earnings in England and Wales at £47,221 but a median house price of £128,000.
There are some outliers when house prices are compared to wages, the ONS said.
The biggest decline in housing affordability in 2017 was seen in the East of England, where house prices rose 10 per cent but wages increased by just 2 per cent. Homes in the area cost nine times earnings on average.
It was followed by the South East, where house prices rise by 6.9 per cent but local wages increased by 1.8 per cent – meaning homes now cost 10.3 times earnings.
Illustrating the commuter effect, in contrast London saw the joint biggest wage increase of 2.9 per cent but house prices rose by a lesser 5.8 per cent.
The ONS report showed how regions saw house price inflation compare to wage rises in 2017