Property cost 7.6 times average annual earnings
New figures from ONS reveal homes cost more than seven times the average annual earnings.
The Office for National Statistics say that working people typically face house prices of more than seven times their annual earnings as affordability of homes is becoming increasingly stretched.
The recent figures reveal that the typical property cost 7.6 times average annual earnings of employees in England and Wales, with the aftermath of the financial crisis seeing house prices rise continually.
In 2007, the typical buyer faced paying 7.2 times their earnings on a property, but this was surpassed in 2015 (7.4 times) and again in 2016 (7.6 times).
The new figures will be hard to digest for potential first-time buyers whose wages have become stagnant as they see property ownership comparatively more expensive.
Borrowing costs are at historic lows with banks and building societies cutting interest rates on mortgages to attract customers.
A report by Shelter suggested that nearly eight out of 10 families across England are unable to afford newly built homes in their local area.
According to calculations by Zoopla, Northampton is the fastest-moving property market in the UK.
Among towns and cities across the country, properties in Northampton were listed for the shortest amount of time, just 27 days.
The figures from ONS show that London hosts seven of the 10 least affordable areas to buy a property in England and Wales last year.
The statistics vary across the country, with properties in Kensington and Chelsea costing 38 times the average income of residents in the area. In Copeland in Cumbria, residents had to pay just 2.8 times typical local earnings for a home.
Property commentator Henry Pryor argues that affordability levels are less relevant for some buyers.
“Up to 40% of buyers do not have a mortgage, they are cash buyers for whom affordability isn’t an issue and for whom there is no link to their income,” he said.
“Half of people who own a home have no borrowings. The unearned and largely untaxed money they have made simply by living in their property isn’t recorded in inflation figures but it is a significant part of what maintains house prices and drives the economy.”
Roger Harding, of Shelter, said: “The only way to fix the housing crisis is for the government to get behind a different way of building that brings down the cost of land.”
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