Despite the latest figures on earnings showing that the average UK wage has outpaced house price growth over the last year, research by Wayhome has revealed that the average property still costs 10.6 times the average annual salary.
Wayhome analysed the latest government data on earnings, comparing it with the latest government house price index, to reveal just how high the current obstacle to homeownership is for the nation’s hopeful homebuyers.
The latest figures, released today, show that the average UK salary has increased by 6.4% annually, now sitting at £26,796.
This notable rate of wage growth comes in contrast to a cooling housing market that has seen house prices increase at an annual rate of just 4.1% over the last year – 2.3% less than the average earnings.
However, despite slower housing market conditions and a robust rate of wage growth, the research from Wayhome shows that the average UK homebuyer still requires 10.6 times their annual earnings in order to afford the average UK house price of £285,000.
This ratio is, of course, at its worst in London. Despite London house prices climbing at the lowest annual rate of all UK regions, up by just 1.5% in the last year, the region has also seen earnings increase by just 4.6% – the third lowest rate of all UK regions.
As a result, the average London home now costs 16.4 times the average earnings in the capital.
This ratio also sits considerably higher than the national average in the South East (13.8), East of England (12.8) and South West (12.7).
In both the East and West Midlands, the average home now costs 9.7 times the average annual income, falling to 8.4 in Wales, 8.3 in the North West and 8.1 in Yorkshire and the Humber.
In Northern Ireland, the house price to income ratio is now 7, while in Scotland it’s 6.8.
Although the North East remains the most affordable UK region for homebuyers, the current average house price of £156,912 is still 6.2 times the average annual earnings.
Co-founder and CEO of Wayhome, Nigel Purves, commented:
“The latest government figures on earnings will bring some reassurance to the nation’s homebuyers, as wages continue to increase at a quicker pace than house prices. However, when you consider the bigger picture, it fails to make a dent in the huge financial obstacle that homebuyers face when looking to get a foot on the ladder.
“Even in this highly unusual landscape where house prices growth is lagging behind wages, the average UK property is still over ten times that of the average annual earnings. For many, this makes the task of saving a deposit and securing the required mortgage unobtainable and this will remain the case until we see a serious market correction.”
