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The average price of a residential property in England is 8.4 times higher than the median household income, the latest figures from the Office for National Statistics (ONS) show.
According to the data, the average house price in England was £275,000 in the financial year ending 2022, while the average annual disposable household income was £33,000.
In Wales, the average house price-to-income ratio was 6.4, in Scotland it was 5.3 and in Northern Ireland it was 5.1.
Only the top 10% of households in England could typically afford a home with fewer than five years of income in the financial year ending in 2022, the stats showed, while in Wales, the top 30% of households by income could afford an average-priced home with fewer than five years’ worth of income and in Scotland and Northern Ireland the top 40% could do this.
An average price home in the North East of England cost the equivalent of nearly 12 years of income for a low income household, the ONS said. This compared with over 37 years of income in London.
In England, Scotland and Northern Ireland, affordability ratios improved slightly compared with the previous financial year.
But in Wales, the affordability ratio worsened, from a ratio of 6.1 previously.
On average, homes in England, Scotland, Wales and Northern Ireland have sold for more than five years’ worth of typical household income since 2017, putting them below the ONS’s affordability threshold of five years of income.
In the financial year ending in 2022, house prices averaged £275,000 in England, £185,000 in Wales, £170,000 in Scotland and £151,000 in Northern Ireland.
Incomes were typically £33,000 in England, £29,000 in Wales, £32,200 in Scotland and £29,600 in Northern Ireland.
The ONS report noted: “It should be noted that government support across the UK has been available to help households into home ownership, through shared equity schemes in England, Wales, Scotland and Northern Ireland.
“This improves house purchase affordability but this is not measured in the affordability metric used in this bulletin.”
Reflecting on the ONS Housing Purchase Affordability Statistics, Andy Russell, said: “The figures suggest that it is still challenging for young people to get on the housing ladder, although there is a small degree of hope for those in the UK where affordability has slightly improved. This could be good news for those who are well on their way to saving a sizeable deposit, for whom the best option right now may be to wait out the current volatility and take advantage of higher savings rates.
“It is a different story for the thousands of young people who are not very far along on their saving journey. They may feel that, with the cost of living and mortgage rates rising all the time, the prospect of owning their own home is fast becoming a pipe dream.”
Tom Nicholson, senior advisor at data science platform Outra, commented: “House prices relative to earnings may have improved marginally in England, but they remain far above five times the median income, the official threshold for whether a home is affordable.
“What is rarely discussed is the problems this presents not just for would-be buyers, but for sellers, particularly at the lower end of the market.
“With both mortgage rates at highs not seen for more than a decade, and prices still more than eight times average earnings, demand is going to be difficult to sustain. Those looking to upsize or relocate should consider cash buyers to recapture the speed and certainty that has been lost in many parts of the country.”
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