Working people can typically expect the cost of a house to be 7.6 times their yearly income, according to the Office for National Statistics (ONS).
Ten years ago, the typical buyer needed to pay 7.2 times their annual income on a house. By 2015 this had risen to 7.4 times their income before reaching 7.6 times last year.
Unsurprisingly London has seven of the top 10 least affordable areas for buying a house, with Kensington and Chelsea leading the way. A property here costs 38 times more than the average annual income of residents in this area, significantly higher than in 1999 when it was 13 times higher than the typical income.
First-time buyers will be particularly disheartened by the ONS figures due to stagnating wages and a lack of affordable housing. The housing charity Shelter recently reported that nearly 80 per cent of families in England cannot afford new-build homes in their local area, even with government schemes such as the Help to Buy ISA and Help to Buy Equity Loan in place.
Despite this discouraging news, potential buyers can at least take some comfort from the fact they can browse through the lowest mortgage rates in history, with banks and building societies locked in an intense rates war.
Meanwhile, some critics highlight that affordability levels are not important for all buyers. Henry Pryor, a property commentator, said: “Up top 40 per cent of buyers do not have a mortgage, they are cash buyers for whom affordability isn’t an issue and for whom there is no link to their income.
“Half of people who own a home have no borrowings. The unearned and largely untaxed money they have made simply by living in their property isn’t recorded in inflation figures, but it is a significant part of what maintains house prices and drives the economy.”
