Home price growth outpaces wages in 90% of UK
Wages are not enough to buy a house in the UK.
Rising house prices outpaced wages growth by more than 90% for England and Wales last year, according to official data that sparked talk of a possible full-blown “affordability crisis”.
The Office for National Statistics (ONS) said house prices grew faster than wages in 91% of local authority districts in 2021.
He added that in England a house typically costs an average of 9.1 times earnings, up from 7.9 times earnings in 2020. In 1997, the figure was about 3.5.
The data comes after multiple surveys indicate that, two years after the start of the coronavirus pandemic, the housing market has continued to defy economic conditions. This month, the Halifax Estate Company said UK house prices were rising at their fastest rate since 2007.
The ONS said housing affordability had worsened in 300 of 331 local authority areas last year. It added that in England average property prices rose 14%, while average earnings fell almost 1%.
Some may be surprised to learn that affordability has “significantly improved” in two of the capital’s most expensive places: the City of London and Westminster, she said. In the latter municipality, the ratio between house prices and earnings fell to 18.9 times earnings. In 2018 there were almost 25.
Kensington and Chelsea remained the least affordable local authority areas in England and Wales, with median house prices estimated at 36.5 times the typical annual wage.
The jump from 7.9-fold to 9.1-fold gains was described as a statistically significant increase. However, the ONS acknowledged that the earnings data included payments to workers who were furloughed during the pandemic. He said his figures were based on actual payments made to employees from the company’s payroll and that, in the case of furloughed workers, he had assumed their regular hours.
Separate official data from the Land Registry revealed that annual UK house price inflation was 9.6% in January, down slightly from December’s 10% figure. That brought the average price to £273,762.
However, the UK annual increase figure hides wide regional variations: in London, prices were up 2.2% from a year earlier, while in Wales they were up 13.9%.
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