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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Latest Comments

Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

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Bertrand
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

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Izzy
Izzy 16 May 2017

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paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

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CommercialTrust
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

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warren
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

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Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

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Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

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MH
MH 13 Apr 2017

You are right that the bank holidays are going to be spoiled in looking for the properties. But people who want to sell their property and looking for the better relocation, they can get benefits of this...

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bnellyb
bnellyb 08 Apr 2017

There will be an exodus of private landlords over the next 5 years as tax changes take effect, private landlords provide an important service to the rental market, why do housing associations and councils...

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Fred Cassman
Fred Cassman 07 Apr 2017

"Make it look like you are at home": often people forget this and share on facebook their location!

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jared townsend
jared townsend 05 Apr 2017

It'll be interesting to see how & if the Government's asset sale regarding mortgages helps

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