Affordability of housing in England and Wales has fallen over the past 12 months from 8.4x earnings to 7.7x earning in England, and 6.2x to 5.9x earnings in Wales; to levels not seen since 2016.
The figures are based on numbers released this week by the Office for National Statistics (ONS) showing median earnings in England currently sit at £37,600 p/a and in Wales at £34,300. The median price of property is £290,000 and £201,000 respectively. The affordability ratio is calculated by comparing earnings from mid-April each year with the prices of homes that sold in the corresponding 12-month period
After the post-pandemic property market boom in 2020/21, during which affordability worsened to levels around 9x earnings in England and 6.6x in Wales, the subsequent improvement in affordability has been driven by by a 20% increase in average earnings since 2021. By comparison house prices have increased 1% in the same period.
The ONS say their threshold of affordability is 5x earnings; a ratio not seen since 2000/01. From 1997 to 2007 the ratio more than doubled from 3.5x to 7.1x earnings in England (3x to 6.6x in Wales). They remained relatively static until 2013 and have steadily grown since. Although affordability has improved since the peak of the pandemic; commentators point to the real-term numbers as simply being out of reach for many and have called on the government to look at ways to create greater affordability for first time buyers with a new variation of Help to Buy mooted as a potential option. The Government have announced plans to introduce a new government-back mortgage guarantee scheme to replace the existing Mortgage Guarantee due to expire this year.
In 1997 88% of all local authorities (LA) had home bought for less than the five times earnings affordability threshold. In 2024 just 9% (27) did; the highest proportion since 2015. And better than 2023 according to the ONS who identified 289 of the 318 LAs in England and Wales had improved affordability in 2024 compared to the previous year.
The findings regionally throw up few surprises. Affordability in London has plummeted where in 1997 57.4% of homes sold in London were sold for less than five times average earnings. By 2024 that was just 3%. In the North East the same metric was 85.4% in 1997 and 49.9% in 2024. The most affordable LAs in 2024 were Blaenau Gwent (with a ratio of 3.8), Burnley (3.9) and Blackpool (3.9); the least affordable was Kensington and Chelsea (27.1)
Between 2019 and 2024, 4 of the 10 largest increases in affordability ratios (worsening affordability) were in the East Midlands, while the 10 largest decreases in affordability ratios have all occurred in LAs in London.
The data also looked at the affordability of new-build housing compared to existing property; with new build on average more expensive than existing property at £350,000, compared with £280,000 in 2024. Despite efforts to increase house building, and with the government’s target of 1.5m new build properties in this Parliament, just 4.7% of sales in England and 2.8% of sales in Wales in the year to September 2024 were new build.
Housing affordability in England and Wales: 2024 can be found here.
