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Research reveals major changes in British housing availability

12 September 2017

  • Analysis by Yorkshire Building Society into change in local house price and earnings ratios since housing market peak before the financial crash 10 years ago
  • Major differences in affordability across Britain, with affordability in some local authority areas worsening by 61% while in others affordability has improved  by up to 42% as changes in housing markets and wages vary
  • 54% of local authorities in England, Scotland and Wales are now more affordable than they were in 2007
  • But many areas are still unaffordable to first-time buyers, with the average price of a home now more than 20 times the average wage in some parts of London

The gap between the least and most affordable parts of Britain has almost doubled since the start of the economic downturn, new Yorkshire Building Society research shows.

However, homes in 54% of local authority areas – including Edinburgh, Birmingham, Peterborough, Leeds and Harrogate - are more affordable now than they were before the financial crash due to wages increasing at a higher rate than property values over this period.  

This is in contrast with London and most of the south of England, which are now far less affordable as house price rises have outstripped wage growth at a far higher rate.

Andrew McPhillips, Yorkshire Building Society Chief Economist, said:

Unsurprisingly, the data shows that there is a distinct divide between the north and south of the country when it comes to housing affordability, but this has become even more pronounced since the financial crash.

Across London and large swathes of southern England, which were already some of the most unaffordable parts of the country, it has become increasingly difficult for first-time buyers and those wanting to move up the housing ladder to be able to buy their first or next home.

However, the north of England, Wales and Scotland present a different picture entirely, with many places, such as Edinburgh, Peterborough and Birmingham, becoming more affordable than they were before the credit crunch.

While some northern cities, such as Manchester, are less affordable than they were in 2007, in much of the north of England, Scotland and Wales, the gap between earnings and house prices is around a third of the average for London.

How affordability has been calculated

Yorkshire Building Society analysed 10 years’ of Office of National Statistics earnings data and Land Registry house price data for 32 London boroughs and 324 local authorities across England, Scotland and Wales to create calculations of average house price to earnings ratios.[i]

At a national level, since September 2007 affordability has improved by 0.6% in Britain overall, by 18.9% in Scotland, 17.2% in Wales but has worsened by 3.3% in England.

 

Greatest improvement in affordability

Local Authority Area

Region

Change in affordability since 2007

Current house price to earnings ratio

House price to earnings ratio 2007

Current average house price

Average house price in 2007

Inverclyde

Scotland

+42.5%

3.67

6.38

£104,638

£122,209

North Ayrshire

Scotland

+37.2%

3.55

5.64

£98,795

£115,282

West Dunbartonshire

Scotland

+34.9%

3.44

5.29

£95,074

£109,128

Burnley

North West

+34.2%

3.15

4.78

£77,629

£94,174

Hyndburn

North West

+33.0%

3.92

5.86

£92,753

£105,096

Hartlepool

North East

+31.9%

3.99

5.86

£105,866

£126,699

East Ayrshire

Scotland

+31.8%

3.10

4.55

£91,024

£107,124

Middlesbrough

North East

+31.3%

4.35

6.34

£111,156

£126,857

Wyre

North West

+30.5%

5.76

8.28

£148,358

£164,295

Sunderland

North East

+30.1%

4.32

6.17

£111,021

£126,829

 

 

 

Largest decline in affordability

Local Authority Area

Region

Change in affordability since 2007

Current house price to earnings ratio

House price to earnings ratio 2007

Current average house price

Average house price in 2007

Three Rivers

East of England

-61.0%

15.83

9.83

£519,922

£332,891

Haringey

London

-60.2%

17.51

10.93

£554,910

£318,233

Westminster

London

-55.9%

24.06

15.43

£1,034,073

£539,759

Southwark

London

-55.1%

15.19

9.79

£524,800

£296,194

Waltham Forest

London

-54.5%

13.57

8.78

£427,113

£242,826

Hackney

London

-53.8%

16.81

10.93

£549,680

£302,432

Elmbridge

South East

-50.3%

15.12

10.06

£586,134

£397,237

Hertsmere

East of England

-49.7%

15.09

10.08

£467,355

£293,145

Sevenoaks

South East

-47.8%

13.30

8.99

£420,296

£292,325

Camden

London

-44.1%

19.94

13.84

£809,408

£485,507

 

Regional changes since 2007

The research shows affordability has worsened most dramatically for London borrowers, where buying the average home is now less affordable in every borough than it was before the credit crunch, dropping on average by 39%. Council areas in the South East and the East of England have also seen a significant drop in affordability, with homes on average becoming 15% less affordable to buy.

The biggest improvements in affordability have come in the North East of England where affordability has increased by an average of 26%, followed by Scotland (20%), Wales (18%), the North West (16%), and Yorkshire and the Humber (14%).

The Three Rivers council area in Hertfordshire and Haringey in north London saw the biggest declines in affordability since the economic crisis, with homes becoming 61% and 60% less affordable to buy over the past 10 years. Average house prices in these authority areas have increased to £519,992 (a £187,101 rise) and £554,910 (a £236,677 rise) respectively.

The average home in Three Rivers now costs 15.83 times the average salary, with this figure at 17.51 in Haringey. The least affordable place in Britain is now Westminster, where a home costs 24.06 times the average wage.

By contrast, Inverclyde, near Glasgow in Scotland, saw the country’s biggest increase in affordability, with homes now 42% more affordable than in 2007 and costing 3.67 times the average salary, followed by North Ayrshire, where homes are 37% more affordable 3.55 times the average wage.

Regional changes in affordability

Region

Change in affordability since 2007

North East

+25.9%

Scotland

+19.6%

Wales

+17.9%

North West

+16.4%

Yorkshire and the Humber

+13.7%

West Midlands

+5.8%

East Midlands

+5.1%

South West

+3.3%

East of England

-15.4%

South East

-15.4%

London

-38.8%

 

 

Most affordable local authority areas

Local Authority Area

Region

Current house price to earnings ratio

House price to earnings ratio 2007

Change in affordability since 2007

Current average house price

Average house price in 2007

East Ayrshire

Scotland

3.10

4.55

+31.8%

£91,024

£107,124

Copeland

North West

3.12

3.66

+14.7%

£123,086

£118,925

Burnley

North West

3.15

4.78

+31.2%

£77,629

£94,174

West Dunbartonshire

Scotland

3.44

5.29

+34.9%

£95,074

£109,128

Blaenau Gwent

Wales

3.46

4.86

+28.8%

£79,611

£90,502

North Ayrshire

Scotland

3.55

5.64

+37.2%

£98,795

£115,282

Na h-Eileanan Siar

Scotland

3.57

-

N/A

£90,031

£92,878

Inverclyde

Scotland

3.67

6.38

+42.5%

£104,638

£122,209

Pendle

North West

3.68

5.25

+29.8%

£90,086

£103,832

North Lanarkshire

Scotland

3.68

4.61

+20.1%

£101,142

£101,552

 

 

 

Least affordable local authority areas

Local Authority Area

Region

Current house price to earnings ratio

House price to earnings ratio 2007

Change in affordability since 2007

Current average house price

Average house price in 2007

Westminster

London

24.06

15.43

-55.9%

£1,034,073

£539,759

Hammersmith and Fulham

London

20.16

14.79

-36.3%

£782,262

£500,410

Camden

London

19.94

13.84

-44.1%

£809,408

£485,507

Haringey

London

17.51

10.93

-60.2%

£554,910

£318,233

Islington

London

17.37

12.54

-38.5%

£648,294

£408,718

Hackney

London

16.81

10.93

-53.8%

£549,680

£302,432

South Bucks

South East

16.69

13.77

-21.2%

£637,547

£401,655

Brent

London

16.14

11.77

-37.1%

£490,660

£298,571

Barnet

London

15.90

11.38

-39.7%

£542,337

£335,807

Three Rivers

East of England

15.83

9.83

-61.0%

£519,922

£332,891

 

Affordability in each local authority can be tracked over the 10-year period using Yorkshire Building Society’s online Affordability Ratio Map.

ENDS PR58-17



[i] Sources: HM Land Registry, UK House Price Index June 2017 and Office for National Statistics, Annual Survey of Hours and Earnings (ASHE) – resident analysis, published 2016. This information is licensed under the Open Government Licence v3.0.

 

 

 

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