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Housing affordability now at its most stretched – as property price inflation outstrips earnings

Home and money concept image
  • House prices up 16.8% since start of pandemic while average incomes up 2.7%.
  • Cost of a typical UK home now 7.1 times average earnings, highest ever level.
  • Westminster and City of London the least affordable local areas in the UK.
  • Inverclyde in Scotland now the most affordable place to buy a home.
  • Pembrokeshire has seen biggest fall in affordability over the last two years.

The impact of surging property prices throughout the pandemic has reduced housing affordability to the lowest level on record, according to new research by Halifax, the UK’s biggest mortgage lender.

The analysis – based on data from the Halifax House Price Index – compared typical house prices to average earnings across the UK.

In the first quarter of 2022, the cost of a typical UK home was £279,431, while the average annual earnings of a full-time worker were estimated to be £39,402*. This puts the house price to income ratio at 7.1, the highest (or least affordable) level ever recorded.

At the start of 2020, average UK earnings were £38,374 and the average house price was £239,281. This put the house price to income ratio at 6.2. Since then, house prices have risen by 16.8%, with earnings up by 2.7% over the same period.

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