23rd February 2016
Average house prices have increased by more than the average employees earnings in more than a quarter of local authority districts over the past two years, new research shows.
The number of local authorities where house prices are outpacing earnings over the last two years has increased from 73 out of 384 (19%) a year ago to 108 out of 380 (28%) today.
The vast majority of these areas are in London, the south east, and east of England with these three regions representing 97 of the 108 (90%).
The biggest gap between rising property values and earnings was in Three Rivers in Hertfordshire, where house prices increased by an average of £147,990 over the last two years, exceeding average take-home earnings in the area by £97,992. Seven London boroughs appear in the top 10 districts.
The top performers outside southern England were Warwick in the West Midlands and South Northamptonshire in the East Midlands, with house price gains in excess of earnings of £24,723 and £14,837 respectively during 2014 and 2015.
Martin Ellis, housing economist at Halifax, says: “The housing market recovery over the last few years has led to substantial price rises in some areas of the country, particularly in London, the south east and the east of England. This has resulted in homes increasing in value by more than total take-home earnings for the average homeowner in many areas of the country.
“Clearly, this is good news for some homeowners. However, it does make conditions tougher for those looking to buy their first home in such areas, with prices being pushed increasingly out of range for many young people.”
Five Years: 2011-2015
Over the past five years, 35 local areas in the UK (9% of the total) have seen average house prices increase by more than total average pay (table 2) this up from 23 districts (6%) in 2015.
The biggest differential was in Hammersmith and Fulham, where average property prices have increased by £248,971, surpassing average take-home pay during the period by £108,653. The top 10 performers are all in London. All 35 areas are in London, the South East and the East.
Ten Years: 2005-2015
Over the past decade, house prices have increased by more than total pay in four areas across the UK: Brent (£11,760), Haringey (£8,255), Hammersmith & Fulham (£4,438) and Cambridge (£1,767).
See tables below: