Newly released figures reveal that UK homebuyers are required to pay 10.6 times their average annual salary to afford the average home, despite the latest earnings figures showing wages have outpaced house price growth over the last year.
This finding is based on research conducted by Gradual Homeownership provider, Wayhome, which analysed the latest government earnings data and house price index.
The latest data indicates that the average UK salary increased by 6.4% over the last year, currently standing at £26,796.
This rise in wages contrasts with a somewhat stagnant housing market that has only seen a 4.1% annual increase in house prices.
This slower house price growth rate is 2.3% less than that of average earnings.
However, despite these slower housing market conditions and robust wage growth, Wayhome’s research shows that the average UK homebuyer still needs 10.6 times their annual earnings to afford the average UK house price of £285,000.
This stark income to house price ratio is most apparent in London. Despite the capital seeing only a 1.5% increase in house prices over the last year—the lowest rate among all UK regions—its earnings only increased by 4.6%, the third lowest rate in the UK. This resulted in the average London home now costing 16.4 times the average income.
In other regions, such as the South East, East of England, and South West, the house price to income ratio is also considerably higher than the national average, at 13.8, 12.8, and 12.7 respectively.
The most affordable region remains the North East, where the average house price is 6.2 times the average annual earnings.
Nigel Purves, CEO of Wayhome, said: “Although wages are growing faster than house prices, this doesn’t significantly lessen the massive financial hurdle homebuyers face when trying to get on the property ladder.
“Even in this unusual situation where house price growth lags behind wages, the average UK property still costs over ten times the average annual earnings.
“This makes the task of saving a deposit and securing the required mortgage unattainable for many, a situation that will persist until we see a major market correction.”
