‘Crazy’ increases in house prices over the last ten years must be taken in the context of inflation and wage growth with the reality being across the UK house prices have increased by 12.1% over the last decade.
That is according to estate agent Yopa’s recently released Housing Market Affordability Review of the last decade which looks at how the cost of homeownership has changed, how this has impacted affordability for buyers when taking earnings into account, and just what costs attribute to the high cost of moving home over the last ten years.
In real terms house prices have increased by 51.8%, from £176,561 in December 2014, to £268,087 in December 2024. In the same period inflation was c.35% cumulatively, says the report, and income growth was c.43%, £22,000 to £31,600.
The numbers, Yopa suggest, mean much of the extreme growth we’ve seen in property market pricing occurred before the last ten years, and point to analysis which shows since 1997 earnings have doubled but house prices increased about four-and-a-half times;
In fact, real house prices today remain not far above 2016 levels once you adjust for inflation, despite the striking nominal figures. The narrative of “excessive” growth needs this inflation-adjusted lens; without it, we risk confusing monetary inflation with runaway housing appreciation.
This ‘long term build up’ is best illustrated by changing affordability ratios; the difference between earnings and house prices. In the late 1990’s homes were considered affordable at around 3.5x income say Yopa. Today that sits between 8 and 9x income, down from the peak of 9.4-9.5x during the post-pandemic property boom in 2021/22. But much of that growth happened between 1997 and 2007 when the ratio doubled. a plateau in the early 2010’s, followed by a gradual rise through the decade. In 2020 the affordability ratio say at 8.8x incomes, by the end of 2024 it has fallen a touch to 8.5%
“So while the past decade’s additional climb (8.0 → 8.5) may not be extreme, it’s layered on top of already historically elevated affordability ratios. This underscores that the affordability challenge is a long-term buildup – the 2010s added a straw to the camel’s back, not a whole new load.”
There are of course regional variations; the ratios fall in Wales (7%) and Scotland (5.9) when compared to the whole of the country. And London has the highest ratio at 14.3x incomes, followed by the South East (11.3x), East of England (10.3x) and South West (10.2x). The North East (5.7x) and Yorkshire and Humber (6.8x) are the most affordable areas.
The research also shows that the increase in the value of a first home has largely remained consistent with the same increase seen across the rest of the market. In the last decade, first-time buyers have seen the price of a first home jump by 50.6%, or 11.2% once adjusting for inflation. At the same time, the value of homes purchased by former owner occupiers has climbed by 51.7% since 2014, or 12% when adjusting for inflation.
This means that, a decade ago, the average first-time buyer was paying 30.8% less compared to existing homeowners, with this gap increasing to just 31.3% today.
New-build properties have seen by far the largest boost in value over the last 10 years, with the average price of a new-build increasing by 79% between December 2014 and December 2024. Even after adjusting for inflation, this rate of growth still sits at 33.1%. In contrast, the average value of an existing property has increased by 51% over the last 10 years, or 12.3% once adjusted for inflation. As a result, the premium paid for a new-build property versus an existing one has increased from 23.7% to 46.6% since 2014.
Commenting on the research, CEO of Yopa, Verona Frankish, said:
“The topline rate of house price growth seen over the last ten years alone can be pretty scary at first glance, to say the least, with the average value of a home increasing by almost 52% since 2014. However, the reality is that this rate of growth is far more palatable when taking inflation into account, although it’s fair to say that the plight of the nation’s homebuyers certainly hasn’t improved when it comes to the affordability of purchasing a property.
What is interesting is that the gap between the cost of a first home and the rest of the market has remained largely consistent, as the cost of a home across both market segments has increased at almost identical rates. The same certainly can’t be said for the new-build sector though, with the value of a new home sky rocketing over the last decade when compared to the increases seen across the rest of the market.”
