The great divide: average earnings vs property costs

It won’t come as a big surprise but new research by the ONS reveals that growth in house prices in England and Wales, has outpaced the increase in earnings.

Between 2002 and 2015, prices have risen by 88%, but median earnings have increased only by a quarter. As a result, the median price paid by buyers across England and Wales rose to six times average salaries in 2015, up from just four times earnings in 2002.

The ONS data also showed that in 122 local authorities – over one third - prices had reached more than 10 times locals’ median earnings.

Average annual earnings in relation to house prices – 2002-2015

In 2015, the median house price across England and Wales was £207,500 – up from £110,000 in 2002. Average annual earnings in 2015 were £32,780, compared with £26,000 in 2002. According to Lindsay Judge, senior research and policy analyst at the thinktank Resolution Foundation:

“Homeowners and renters alike are seeing more of their earnings eaten up by accommodation costs, undermining living standards for millions.”

The figures show the housing crisis is not just in London but has spread to cities across the country and housing is becoming less affordable.

The biggest stretch between earnings and prices was in London and the south-east. Both Camden and Hammersmith & Fulham had median prices that were 21 times earnings, at £699,950 and £730,000 respectively.

The figures disguise big differences around the UK. While in Burnley, at £78,000 the median house price was less than four times local salaries, in Westminster it was 23 times average earnings, at £877,000.

Average annual earnings in relation to rents

The ONS said local authorities in London made up 14 out of the 15 least affordable areas for private renting, with Sevenoaks in Kent the only one outside the capital to be included. There, the median price of private rent represented 59.6% of median gross monthly salary.

It added that in 2015, there were 35 local authorities out of 326 with a median monthly private rent equivalent to 50% or more of median monthly salary.

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