Housing affordability returns to pre-pandemic levels: ONS

Average house prices increased in 69% of areas compared with 2022, while average earnings increased in 88%.

Related topics:  Mortgages,  House prices
Rozi Jones | Editor, Barcadia Media Limited
25th March 2024
calculator rates mortgage house
"It’s almost surreal to see that in the late 1990s, house prices were only roughly 3.5 times more expensive than average annual earnings."
- Arjan Verbeek, CEO of Perenna

In 2023, full-time employees in England could expect to spend around 8.3 times their annual earnings buying a home, the latest ONS statistics show.

The equivalent figure in Wales is 6.1 times their annual earnings.

At the national level, these ratios are similar to 2022, and represent a return to the pre-coronavirus pandemic trend after a large increase between 2020 and 2021.

In the 318 local authorities (LAs) in England and Wales, housing affordability improved in 237 (75%) since 2022, worsened in 77 (24%), and stayed the same in the remaining 1%.

In 2023, 7% of LAs (23) had homes bought for less than five times workers' earnings and therefore deemed affordable; this is more than in 2022 and similar to numbers before the pandemic. The most affordable LAs in 2023 were in the North West, North East, and Yorkshire and The Humber.

The ten largest improvements in affordability in the past five years were in local authorities in London or bordering London; however, they remain some of the least affordable areas.

The ONS says changes in house prices are the main cause of the change in affordability. Average house prices increased in 69% of areas compared with 2022, while average earnings increased in 88%. At a national level, homes were affordable on average at the start of the series until 2002, and not affordable after.

The average (median) price of homes sold in England and Wales increased by £9,500, or 3.4%, between the 12 months ending September 2022 and the 12 months ending September 2023. Meanwhile, the average earnings increased by £1,900, or 5.6%.

Arjan Verbeek, CEO of Perenna, commented: “The latest ONS figures indicates a positive shift, with the house price to earnings ratio showing signs of stabilisation, which is a step in the right direction for prospective homeowners. However, the journey towards inclusive and equitable homeownership is far from over. The overall earnings gap is still very high – and it’s almost surreal to see that in the late 1990s, house prices were only roughly 3.5 times more expensive than average annual earnings.

“While today’s statistics offer a glimmer of hope, it is the responsibility of the industry and policymakers alike to ensure that this translates into tangible outcomes for individuals and families across the UK.”

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