Rent is now cheaper than mortgage payments: Where in London are workers are being priced out of the property market the fastest?

by | Sep 16, 2023

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It is now cheaper to rent a home than buy one for the first time since 2010, due to the rise in interest rates which are making getting a foot on the property ladder seem impossible for many. According to Zoopla, London boroughs are some of the worst affected areas in the country for mortgages costing more than the average rental, despite rocketing rent prices in the capital.

A new study from Online Mortgage Advisor explores where local workers are being priced out of the local property market the fastest by looking at how much property prices have outgrown local wages during the past 10 years. To do this, we calculated the ratio change between the median house price and median annual salary in 2013 vs 2022 in 330* local authorities from 12 regions across Great Britain. A higher ratio indicates a larger growth in the gap between property prices and local earnings, meaning workers were priced out of the area at the fastest rate.

The research revealed that Greater London was the British region where workers were priced out the most, while also revealing the boroughs with the largest change in the affordability ratio.

 
 

279 from England, 21 from Wales and 30 from Scotland. 

Key findings:

  • Londoners have been priced out of the property market the fastest in the country, with an average property price to salary ratio increase of 3.78.
  • Properties in all London boroughs became more unaffordable compared to average salaries in the past 10 years.
  • Kensington and Chelsea, Hillingdon and Barking and Dagenham were the worst affected London boroughs according to our research.

Please credit the information with a link to Online Mortgage Advisor’s research page should you wish to use the data for a story: https://www.onlinemortgageadvisor.co.uk/content/priced-out-property-2023 

 

-Although the project page only shows data up to June 2022, the data in this email is updated to December 2022, which is the latest that has been released by the producer of official statistics in England, Wales and Scotland. 

In which London boroughs did property prices outgrow wages the fastest?

  • Kensington and Chelsea has seen the biggest change in property affordability compared to local earnings. 10 years ago, full-time workers could typically expect to spend 31.27 times their annual salary on buying a home. This has risen over the years and by December 2022, workers could expect to fork out 38.12 times their salary, an increase in the ratio of 6.85.
  • House prices in Brent outgrew local salaries at the slowest rate, with a ratio change of just 1.03. 
  • Workers have been priced out of buying property in all London boroughsresearched, with property prices growing at a faster rate than salaries in all areas of the capital.
 Median Salary (GBP)Median House Price (GBP)Property Price to Salary RatioRatio Difference 2013 to 2022
Borough201320222013202220132022 
Kensington and Chelsea31,30736,468979,0001,390,00031.2738.126.85
Hillingdon35,73834,271269,950485,0007.5514.156.6
Barking and Dagenham32,24831,675180,995375,0005.6111.846.23
Barnet29,35334,291345,000612,50011.7517.866.11
Redbridge31,21534,277274,998496,0008.8114.475.66
Havering29,85833,480232,500445,0007.7913.295.5
Richmond upon Thames31,99737,041475,000752,00014.8520.35.45
Merton28,61033,702320,500560,00011.216.625.42
Ealing29,73334,742326,950555,0001115.974.97
Lambeth35,39738,168350,000550,0009.8914.414.52
Sutton30,06135,707250,000457,5008.3212.814.49
Lewisham30,47836,104260,000470,0008.5313.024.49
Kingston upon Thames29,45036,150335,000566,00011.3815.664.28
Greenwich29,25133,728275,000460,0009.413.644.24
Harrow25,78433,356325,000555,37512.616.654.05
Bexley28,51235,610225,000425,0007.8911.934.04
Bromley28,12636,542295,000529,00010.4914.483.99
Wandsworth31,49136,696465,000685,00014.7718.673.9
Croydon30,93938,765239,950430,0007.7611.093.33
Enfield25,80536,282250,000472,2509.6913.023.33
Newham29,33440,450230,000435,0007.8410.752.91
Southwark36,19843,694350,000545,0009.6712.472.8
Hammersmith and Fulham34,55440,020561,000757,25016.2418.922.68
Hackney33,09743,115375,000600,00011.3313.922.59
Tower Hamlets46,44152,111329,650500,0007.19.592.49
Islington37,32544,997465,000654,32112.4614.542.08
Westminster36,94645,135725,000975,00019.6221.61.98
Camden36,33644,424585,000785,00016.117.671.57
City of London54,20260,963615,000770,00011.3512.631.28
Brent28,03442,428347,500570,00012.413.431.03

London property prices outgrew local salaries the most in comparison to other British regions

 

Our study was conducted across 11 regions across Great Britain to facilitate comparisons across the country.

  • London salaries struggled the most nationwide to keep up with property prices.
  • In the North East, the affordability ratio increased by the least, with a ratio change of only 0.13. This means that median salaries almost kept up with median house price changes over the last decade.
  • In no British region did wages keep up with the increase in property prices during the last 10 years.
 Median Salary (GBP)Median House Price (GBP)Property Price to Salary RatioRatio Difference 2013 to 2022
Region201320222013202220132022 
London32,45638,557323,450530,0009.9713.753.78
East of England26,39632,028200,000338,0007.5810.552.98
South East27,68733,755235,000380,0008.4911.262.77
South West24,80630,529190,000305,0007.669.992.33
East Midlands24,30530,178141,500234,9955.827.791.97
West Midlands24,83830,571149,995232,0006.047.591.55
North West24,74130,393132,000197,0005.346.481.15
Yorkshire and The Humber24,43729,478134,950190,0005.526.450.92
Wales23,47629,971135,000195,0005.756.510.76
Scotland25,78632,271135,000189,9685.245.890.65
North East24,53429,264122,500150,0004.995.130.13

Methodology

  • Property prices in our analysis were retrieved from The Office for National Statistics (England and Wales) and ROS (Scotland), and are correct for Q4 of each year (2013 & 2022). Although the project page only shows data up to June 2022, the data in this email is updated to December 2022, which is the latest that has been released by the producer of official statistics in England, Wales and Scotland.
  • Median annual gross salaries for Great Britain were sourced from ONS.
  • The property price to salary ratios from 2013 and 2022 were compared across 330 authorities nationwide to determine our results.

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