Britons in full time work spent over eight times their annual earnings buying a home last year, and London dwellers have been hardest hit.
In the year to last September, the average house in England sold for £290,000, while the typical earnings of a full time worker were £35,000, giving a ratio of 8.3, a housing affordability report by the ONS said.
Today’s figure is the same as 2022’s reading, which was lower than the prior year’s reading of over nine.
The ten largest improvements in affordability in the past five years were in local authorities in London or bordering London; however, they remain some of the least affordable areas across the whole of the UK.
In the London borough of Wandsworth, the average salary worker made just shy of £40,000 last year, but the average house cost £600,000, giving a ratio of 16.6.
Meanwhile, in the borough of Richmond, the average worker also made around £40,000 and the average home cost over £700,000, giving a ratio of 18.4.
Over a decade of wage stagnation coupled with a tough economic climate has made buying a home increasingly difficult.
Charles Breen, founder at Montgomery Financial, said: “Relentless house price rises have hamstrung homeowners’ affordability.
“While house prices peak, pay cheques not keeping pace have left the vast majority struggling with affordability and unable to get on the property ladder.”
It appears our social contract with the government for them to provide hard-working people the chance of home ownership has been torn up.
This isn’t affordable Britain, it’s rip-off Britain.
Charles Breen
It comes as the UK’s housing market is facing heightened scrutiny.
Despite mortgage rates falling at the start of the year, they have started to creep up again, placing pressures on buyers.
The government has in the past introduced a number of relief measures to help hard hit first time buyers get on the ladder, such as the help to buy scheme, but this has now ended.
Relief for first-time buyer stamp duty has also been in place since the 2022 mini-budget, but this is set to end in 2025.
This means reversing the changes where the threshold for full relief from paying stamp duty as a first-time buyer was raised from £300k to £425k.
Old, badly-insulated and expensive
A report released today by the Resolution Foundation showed houses across England are sub-par when compared to their European rivals.
It said UK housing stock is the oldest of any European country, with some 38 per cent of homes built before 1946..
However, just 21 per cent of homes in Italy, and 11 per cent in Spain, were built before the end of the war.
“Older homes tend to be poorly insulated, leading to higher energy bills and a higher risk of damp,” the Foundation said.
“Britain’s housing crisis is decades in the making, with successive governments failing to build enough new homes and modernise our existing stock.”- Adam Corlett, principal economist at the Resolution Foundation
London also trails behind other major cities globally in terms of floor space available.
In 2017, London households had 33m2 of space available, compared to 43m2 in New York.
The Foundation said that high cost and low quantity leave the UK’s housing stock “offering the worst value for money of any advanced economy”.
UK households pay 57 per cent more for the same housing as their counterparts in Austria and 36 per cent more than those in Canada.
Adam Corlett, principal economist at the Resolution Foundation, said:“Britain’s housing crisis is likely to be a big topic in the election campaign, as parties debate how to address the problems of high costs, poor quality and low security that face so many households.
“Britain is one of many countries apparently in the midst of a housing crisis, and it can be difficult to separate rhetoric from reality.
“But by looking at housing costs, floorspace and wider issues of quality, we find that the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy.”
Adam Corlett,
“Britain’s housing crisis is decades in the making, with successive governments failing to build enough new homes and modernise our existing stock. That now has to change.”
A Department for Levelling Up, Housing and Communities spokesperson said: “Housebuilding is a government priority and despite global economic challenges we remain on track to meet the manifesto commitment of delivering one million homes this Parliament, and have introduced reforms to improve the planning system.
“At the same time as increasing the quantity of homes we are driving up quality, with the number of non-decent homes down by two million since 2010.
It continued: “Our landmark Renters Reform Bill is progressing through Parliament and will give tenants more security in their homes, while our £11.5bn investment in the affordable homes programme and £1.2bn local authority housing fund will help build a new generation of affordable and social housing.”