Housing affordability shows signs of stabilisation – ONS

In 2023, full-time employees in England could expect to spend around 8.3 times their annual earnings buying a home. 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 (COVID-19) 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.

What’s more, 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.

New dwellings in each region and country also cost more than five times average earnings in 2023; only existing dwellings in the North East cost less than that. Commenting on the housing affordability stats released by the ONS today, Arjan Verbeek, CEO of Perenna said:

“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.

It’s crucial that we continue to build on this momentum with a focus on creating an accessible housing market that moves away from short-termism and instead welcomes long-term, fixed-rate mortgage products that offer security and affordability to buyers. By doing so, we can ensure that this progress is not a temporary fluctuation, but the beginning of a long-term trend towards a more inclusive housing market. 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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