New research has revealed that housing affordability – measured by comparing average earnings with average property prices – is less than half of what it was in the 1990s.
According to House Buyer Bureau, whose data is adjusted for inflation, house prices now sit at 8.8 times the average earnings.
Homebuyers – who “have never had a harder task when looking to climb the ladder” – are faced with an average house price of £286,489 while earning an average of £32,432. While house prices have risen 318% since the 1970s, earnings have risen by 94%.
This means 8.8 times the average income is currently required to buy the average home, compared with 4.1 times the average income in the 1970s when wages sat at £16,723 and house prices sat at £68,493.
Although the average home may have been significantly more affordable when compared to the current market, the average earnings was also far lower at £2,265 or £16,723 after adjusting for inflation. Affordability was even better in the 1990s where house prices were just four times the average wage, while affordability in the 1980s was 4.2 times the average wage.
However, this ratio of property affordability has been on the rise ever since, increasing considerably during the 00s, with house prices requiring 6.4 times income during the first decade of the new Millennium and hitting 7.1 in the decade that followed, before rising to the current rate of 8.8 weeks.
Managing Director of House Buyer Bureau, Chris Hodgkinson, commented:
“You have to feel for today’s homebuyers who have seen house prices explode over the last decade or two, in particular, while the earnings on offer to them have failed to keep pace.
As a result, they require over double the level of income to cover the cost of a home compared to their previous counterparts looking to purchase back in the 70s.
As if this wasn’t bad enough, they’ve been further squeezed by high levels of inflation and the cost of living crisis in recent months and, as a result, are now paying through the teeth when looking to secure a mortgage due to interest rates hitting 5%.”
