UK Home Affordability
Where could you afford to buy your first or next home? Our new affordability map shows some major differences in housing affordability across Britain since the start of the economic downturn.
Starting in the USA, the financial crisis first touched the UK in 2007. It wasn’t long before house price plummets were being reported. But what has happened to British home affordability since?
Here at Yorkshire Building Society we have analysed 10 years’ worth of Office of National Statistics and Land Registry data, on local property prices and wages, in order to ascertain these changes and create our home affordability map.
At one end of the scale, Inverclyde (Renfrewshire), has increased in affordability by just over 42%. At the other end, Three Rivers (Hertfordshire) has become 61% less affordable and the average price of a home in Westminster, London is now more than 24 times the average local wage!
Of the 356 local authorities analysed across England, Scotland and Wales, 54% are now more affordable than they were 10 years ago, including major cities like Edinburgh, Birmingham and Leeds.
The research has shown that London, and most of the south of England, is now far less affordable as property price rises have exceeded wage growth at a far higher rate than in the rest of Britain.
How does it work?
Using data from September 2007 to the present date, we’ve mapped the changes in local property prices (calculated quarterly) and wages (calculated annually) to show how the picture has changed.
Nationally, affordability in Britain is now almost where it was in 2007, with affordability in England worsening by 3%, but improving in Scotland by almost 19% and in Wales by 17%.
Changes in housing affordability are worked out by looking at the differences in ‘property price to earnings ratios’. These ratios have been used to compare affordability in different time periods and different regions more accurately than just comparing the property prices.
Property price to earnings ratios, themselves, are calculated by dividing property prices by annual earnings. For example if the average property price was £150,000 and the average salary £25,000 the property price to earnings ratio would be 6.
Have a look at our affordability map to find out how housing affordability has changed in your local area or the area you’re looking to buy in.
Least affordable local authority
Most affordable local authority
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.