New high reached for house price to earnings gap

New high reached for house price to earnings gap

The latest data from Hometrack has highlighted that, in certain parts of the country, the gap between average earnings and house prices has reached record levels.

According to the report, lack of supply and strong demand for housing in London has pushed house prices up by 86% since 2009 meaning the capital now has an eye-watering house price to earnings ratio of 14.2x - the largest on record and more than double the UK ratio of 6.5x.

Cambridge and Oxford also have double digit price to earnings ratios which, in turn, are well ahead of the average over the last 12 years.

Strong house price growth in Bristol in the last 2 years, which has the fastest growing house prices in the index, has pushed the price to earnings ratio to 9.2x earnings.


Three cities have price to earnings ratios that are below the average, namely Glasgow (3.7x), Liverpool (4.4x) and Newcastle 4.8x) where house price growth is starting to pick up off a low base.

Overall the annual rate of city house price inflation is 8.4% as the upward momentum in house price growth holds firm in large regional cities post the outcome of the Brexit vote.

However, the year on year rate of house price growth across London has slowed to its lowest level for three years (9%) and Hometrack expects it to slow further towards low single digit growth in the next 6-12 months as demand weakens in the face of record high unaffordability and in the wake of a raft of fiscal policy changes aimed at investors.

Richard Donnell, Insight Director at Hometrack, said: “The impetus for house price growth is shifting from the affordability constrained cities in southern England to cities in the midlands and the north of England. Regional cities have more attractive affordability levels and house prices have significant potential upside for growth in the near term subject to the outlook for the economy.

In cities where affordability levels are stretched fewer households are able to participate in the market and this reduces levels of turnover and leads to lower levels of house price growth. This process is underway in London where the annual rate of growth is close to its lowest level for 3 years and where the top end of the market is already registering falling prices.

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brandonlee10
brandonlee10 24 Jul 2017

The financial ramifications of the triggering of Article 50, the starting gun for Britain's departure from the EU, are far from clear. Buyers will be most cautious in London, given that buying a home in...

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IrisJ.
IrisJ. 19 Jul 2017

Great advice, but may I also add that when buying an already built home, make sure you do all of the proper inspections. Most importantly pest inspection because people tend to get surprised when they

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IrisJ.
IrisJ. 17 Jul 2017

The third point is, in my opinion, the most important one. People have become too inconsiderate and careless when it comes to rented properties. If a landlord wants to protect their property, regular visits...

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cornishalan
cornishalan 10 Jul 2017

Added to the cost of purchasing these village properties are the above average maintenance costs. Particularly where the property is a listed building or requires specialist building skills such as thatching...

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Jo Mullett
Jo Mullett 07 Jul 2017

Here in Swansea, known as the Japanese knotweed capital of the UK, it never fails to amazes me that people have no idea of the potential problems this invasive non-native plant can cause when buying or...

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NathanG
NathanG 05 Jul 2017

McDonalds, for example, have been purchasing their real estate on prime locations for years. If something happens to the company they'll have invaluable assets that will be able to save them. We might

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Jonah
Jonah 04 Jul 2017

Graham: surprised to see you cite the "extra tax liability" as capping out at ?560. It doesn't - the extra tax is exponential, as it is levied on the income (i.e the inflating level of rental income you...

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Dianne Griffen
Dianne Griffen 29 Jun 2017

Be very wary of anyone bringing you deals that they have ?found? and want to ?sell on to you? or ?joint venture? with you on ? you need a proper legal contract for this, involve a RICs surveyor to confirm...

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jason hadzikostas
jason hadzikostas 28 Jun 2017

The most important thing is a budget. Students have to manage their spendings in food, house maintenance, books and many other things. According to me, student Studios are the perfect option for them as...

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SecomTech
SecomTech 22 Jun 2017

AT Last...This was discussed years ago and there was a move towards landlords registering their bad tenants on a database..(can't remember where) It seems a logical step though our leaders will probably...

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Bertrand
Bertrand 02 Jun 2017

How about the Welsh Govt introducing a scheme to protect landlords against "rogue" tenants who are then taken to court for criminal damage to the properties they trash. Pretty unlikely I suspect and politically...

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AmberMorris
AmberMorris 25 May 2017

"Please don't pick a novelty tune-playing doorbell. They're not 'fun'. They're stupid." Laughed a lot to this. It's actually true, though.

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