The Office for National Statistics (ONS) has recently published an affordability analysis covering the whole UK looking at ratios of house prices to household incomes.
It found that in England, the average house price was £275,000 in the financial year ending 2022, and the average annual disposable household income was £33,000, equivalent to a ratio of 8.4 years of income. In a nutshell, in England, only households in the top 10% of income can afford an average home with fewer than five years of income.
The figures differ in the 4 parts of the UK:
- in England, £275,000 for an average-price home and £33,000 for average income (a ratio of 8.4)
- in Wales, £185,000 for an average-price home and £29,000 for average income (a ratio of 6.4)
- in Scotland, £170,000 for an average-price home and £32,200 for average income (a ratio of 5.3)
- in Northern Ireland, £151,000 for an average-price home and £29,600 for average income (a ratio of 5.1)
Additionally, making homes even more unaffordable, more than 1.4 million households in the UK are facing the prospect of interest rate rises when they renew their fixed rate mortgages in 2023.
Alas, while incomes in England and Wales have grown faster since 2000 than UK inflation, house prices have increased considerably faster than incomes.
Please note that the ONS approach of comparing average purchase prices to income does not take account of upfront costs such as fees and surveys, or deposits, nor does it take into account any impacts on housing cost affordability resulting from changes to mortgage interest rates and payments (all additional costs to factor in if buying a house).
Info source: Office for National Statistics (ONS), released 27 July 2023, ONS website, statistical bulletin, Housing Purchase Affordability, UK: 2022