Struggling wage earners in England require a staggering 13 times their income to afford the average-priced home.
Affordability of Homes in the UK: ONS Report Reveals Key Findings
The UK Office for National Statistics (ONS) has recently published a report on the affordability of homes in England, Wales, Scotland, and Northern Ireland. The report, released in 2023, analysed the ratio of house prices to annual disposable household incomes in the financial year ending 2024.
According to the report, the median average home sold for £290,000 in England, £200,000 in Wales, £185,000 in Scotland, and £168,000 in Northern Ireland. The average disposable household income was around £37,000 in England and Wales, £35,000 in Scotland, and £36,000 in Northern Ireland.
The report used a threshold of five years of income as a broad indicator of affordability. In England, a lower-wage household would need 13 times their income to buy an average-priced home. In the North East, an average-priced home cost the equivalent of 8.5 years of income for a low-income household earning at the bottom 20%. In Scotland, an average-priced home would cost 7.8 times a lower-income household's income.
In contrast, Northern Ireland's incomes have increased more quickly than house prices in the past five years, resulting in homes selling for less than five times average household income in the financial year ending 2024. This makes Northern Ireland the most affordable region in the UK, with an average-priced home deemed affordable to those with an average or higher income.
In Wales, an average-priced home would cost 9.2 times a lower-income household's income, and an average home was deemed affordable to those in the top 40% of incomes. In Scotland, an average home was deemed affordable to those in the top 40% of incomes as well.
However, the report painted a different picture in the South East of England, East of England, and South West, where the average home was affordable only to the top 10 per cent. In London, an average home was deemed unaffordable for any household income decile, with an average-priced home being the equivalent of 34.6 years of income for households at the bottom 10% of incomes.
The report was released on the same day that the Bank of England base rate was held at 4%, with some mortgage rates having edged up in recent weeks. The ONS said, "In all four countries, affordability improved in (the financial year ending) 2024 as ratios decreased compared with the previous year."
In conclusion, the report provides a comprehensive analysis of the affordability of homes across the UK. While some regions show improvement, affordability remains a significant challenge in many areas, particularly in London and the South East of England. The report serves as a valuable resource for policymakers and homebuyers alike in understanding the current state of the housing market in the UK.
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