Housing affordability improved last year as the average average residential property price in England at £290,000 was equal to 7.7 times average full-time earnings of £37,600, up from 8.4 a year earlier, the latest index from the Office for National Statistics shows.
Affordability was also better in Wales, where the average property price of £201,000 was equivalent to 5.9 times average earnings of £34,300, down from 6.2 times earnings in 2023.
In both England and Wales, ratios have returned to pre-pandemic levels following a sharp worsening of affordability during 2020 and 2021.
In London, average house prices were 11.1 times earnings last year, down from a peak of 12.9 in 2021.
In 2024, 9% of local authorities across England and Wales – or 27 out of 318 – had average house prices of less than five times average earnings and were therefore deemed “affordable”.
This is the highest proportion since 2015, but far lower than in 1997 when the data series began and 88% of areas met the definition of affordable.
Toby Leek, President of NAEA Propertymark, commented: “It’s encouraging to see that overall housing affordability has increased year on year. As many people battle increases in ongoing expenses, it’s positive to see that this easing counteracts some of those pressures and allows home ownership aspirations to continue for many people.
“Notably more so in England, the affordability ratio has decreased significantly, with areas from up and down the country becoming more affordable allowing people across the country to step onto the housing ladder or move home more easily.
“In Wales, affordability has notoriously been better than across other areas of the UK, therefore, to see this further improve in 2024 is great news.
“However, ongoing issues remain, especially for first-time buyers as the average deposit needed to enter the market and take advantage of more competitive mortgage deals currently sits at around £50,000 which is out of reach for many people. Alongside this, interest rates are higher than what many are used to witnessing, which continues to place additional pressure on finances. Government-backed schemes are needed for first-time buyers moving forward and once inflation, and in turn interest rates, continue on their downward path, we hope this also offers the extra boost many other people need in order to work toward their home ownership goals.”
Pegasus Group’s senior economics director Richard Cook commented: “While the dial is beginning to turn on housing affordability, the fact remains that the income to house price ratio has gotten worse over the last decade, and we are still above the affordability ratio of 2014.
“The affordability ratio needs to come down in the long term. As it stands, one year is not a trend, it’s an anomaly.
“With mortgage providers only willing to lend on 4.5 times one’s salary, it remains near impossible to get a foot on the ladder with the way that income to house price ratios are going.
“The pressure is now back on the government to build more homes to bring affordability down further and improve economic growth.
“Today’s figures paint a clear picture; housing is still a crisis for every region in the UK.”
