Average house prices are now 7.1 times typical earnings, research shows
House prices have risen 16.8% since the start of the pandemic, according to Halifax research
House prices are continuing to rise, with a typical UK home now costing more than seven times average earnings.
Halifax, the mortgage lender, carried out some research, they found that a typical UK home is 7.1 times average earnings.
Since the beginning of the pandemic in 2020, house prices have risen by 16.8% from £239,281, with earnings rising by 2.7% from £38,374.
The cost of an average home in the UK was £279,431 in the first quarter of 2022, while annual average earnings of a full-time worker were estimated to be £39,402.
Where is the most expensive place for a home?
London was found to be the most expensive place to buy a home, with an average property price of £534,977 and house price to earnings ratio of 9.7.
Westminster and the City of London, however, witnessed the sharpest improvement in the house price to earnings ratio since the start of the pandemic, with a drop from 16.8 in early 2020 to 14.5 in 2022.
This is a sign of increasing buyer demand for larger properties in less urban locations, Halifax suggested.
Most and least affordable house prices
On the other hand, the North East of England was ranked as the most affordable region for home buyers, with an average house price of £162,692 and house price to income ratio of 4.6.
House prices in the North East of England are also more affordable than they were in 2007, when the ratio was 5.8.
In Inverclyde in the west of Scotland, house prices were 3.1 times average earnings - making it the most affordable place to buy a home in the study.
Westminster and the City of London were identified as the least affordable areas to buy a home, despite the recent improvement in affordability.
Despite the rising cost of housing, market activity suggests that many are still considering a move, which could be due to joint applicants being able to make use of two salaries.
What is the average age of a first-time buyer?
The research also discovered that the average age of a first-time buyer is 32 - three years older than a decade ago - and that many in this category will be joint applicants who have two wages to support housing costs, which may include funds from the "bank of mum and dad".
Andrew Asaam, mortgages director at Halifax, said: "With interest rates on the rise as a means of combatting inflation, it's unlikely that house prices will continue to grow at the pace we've seen recently.
"This should see the gap between average earnings and property prices over time."
What is The Bank of England base rate?
The Bank of England base rate stands at 1.25%, the highest since January 2009.
The research was based on data from the Halifax house price index, which compared typical house prices to average earnings across the UK.
Here are average house price to earnings ratios across the UK in the first quarter of 2022, according to Halifax:
- London, 9.7
- South East, 9.3
- East of England, 8.5
- South West, 8.4
- East Midlands, 6.8
- Wales, 6.5
- West Midlands, 6.5
- North West, 6.1
- Yorkshire and the Humber, 5.4
- Northern Ireland, 5.1
- Scotland, 5.1
- North East, 4.6