The average home in the UK costs £285,000, which is 10.6 times the median salary, despite wages exceeding house prices, data from Wayhome shows.
Despite closing this gap over the past year, “it doesn’t make a dent in the massive financial obstacle homebuyers face when they want to get a foot on the ladder,” says the gradual homeownership company.
The average UK salary rose 6.4% to £26,796 from a year ago, according to figures from the Office for National Statistics released today.
The Bank of England has previously warned that high wage increases are contributing to the UK’s high price rises, prompting the central bank to raise key rates to 4.5% 12 times in a row.
The home lender says: “This remarkable pace of wage growth contrasts with a cooling housing market that has seen home prices rise just 4.1% year on year over the past year – 2.3% less than median incomes.”
It points out that in London, despite house prices rising by just 1.5% over the past year with the lowest annual rate of any UK region, the region also saw profits rise by just 4.6% – the third lowest percentage of any UK region .
This means that the average house in the capital costs 16.4 times the average income in the city, the highest in the country.
This compares to the next highest ratios in the South East, 13.8 times, the East of England, 12.8 times and the South West, 12.7 times.
The North East remains the most affordable UK region for homebuyers, with the current median house price of £156,912, at 6.2 times median annual income, followed by Scotland, at 6.8 times, and Northern Ireland, at 7 times.
Nigel Purves, co-founder and CEO of Wayhome, says: “The latest government earnings figures will provide some reassurance to homebuyers in the country as wages continue to rise faster than house prices.
“However, when you look at the bigger picture, it doesn’t make a dent in the huge financial obstacle homebuyers face when trying to get a foot on the ladder.
“Even in this highly unusual landscape where house price growth is lagging wages, the average UK property is still more than ten times the average annual income.
“For many, this makes saving a down payment and securing the required mortgage unfeasible and will remain so until we see a serious market correction.”
