According to ONS, in England in 2019, full-time employees could typically expect to spend around 7.8 times their workplace-based annual earnings on purchasing a home; this is a significant improvement from the previous year when the ratio was 8.0. In Wales during the same year, this figure was 5.8 times their workplace-based annual earnings, a similar level to 2018.
In both England and Wales, earnings increased proportionally more than house prices in 2019, making housing more affordable. In England, the median price paid for properties increased by 0.02% in 2019 compared with 2018, while earnings increased by 2.7%. In Wales, house prices increased by 2.6% while earnings increased by 4.4%.
At a local level, earnings grew faster than house prices in 55% of local authority districts, leading to improvements in housing affordability in these areas; however, these were not statistically significant changes. In 2019, new dwellings remained less affordable than existing dwellings in both England and Wales.
The gap between the most and least affordable local authorities decreased in 2019, the first decrease since 2015.
Copeland, in the North West of England, remained the most affordable local authority in England and Wales in 2019. Here, the average price paid for properties was estimated to be 2.8 times average annual earnings. This is a slight increase from 2018 but is not statistically significant.
Kensington and Chelsea, in London, remained the least affordable local authority in England and Wales, with average house prices estimated at 39.6 times average annual earnings. This is a decrease from 2018 when house prices were 44 times annual earnings in Kensington and Chelsea, although it was not a significant change.
Kevin Roberts, Director, Legal & General Mortgage Club, comments: “Affordability in the housing market is clearly improving. Over the past year, buyers have taken advantage of the low rate environment and many have sought out the support of advisers to find great mortgage deals. Younger buyers and even those further up the ladder have also continued to benefit from schemes like Help to Buy and Shared Ownership.
“We are now clearly in unprecedented times though and industries across the UK, including the mortgage market, will be facing the challenge of adapting to a new normal. However, homeownership is an ambition shared by people across the country. Couples, families and individuals will all still want to step onto and up the ladder and homeowners will need to remortgage too. Many will continue to seek out the support of a mortgage adviser for guidance on repayment holidays and finding new deals should they become concerned about their financial wellbeing for example, seeking certainty that they are making the right decisions in these challenging times.”
