20.03.17
Housing now unaffordable in all council areas as prices soar to 8 times earnings
Housing affordability has worsened in all of the England and Wales local authority districts over the last 20 years, as the median price paid for residential property soared by 259%, a new report by the Office for National Statistics (ONS) has revealed.
Using information from the House Price Statistics for Small Areas, the ONS calculated affordability by dividing house prices by annual earnings in different authorities across the country.
The results of the findings form a grim picture of the UK housing market that shows average earnings are failing to keep up with the rising price of residential properties.
Working people in 2016 could expect to pay around 7.6 times their annual earnings on purchasing a home in England and Wales, which is more than double the rate in 1997 – where it stood at 3.6 times average earnings.
It was also revealed that the gap between average wages and house prices has seen a spike in the last two years. Between 2015 and 2016, 93% of councils experienced a rise in house prices – yet in the same year there were no significant changes in earnings in any local authority in England and Wales.
Unsurprisingly, housing affordability had worsened fastest in London boroughs over the last two decades, with seven out of the 10 least affordable councils in 2016 being in the capital, where house prices were 38.5 times the median gross average earnings in the area.
In response, a DCLG spokesperson said: “Since 2010, government-backed schemes have helped more than 362,000 households to buy a home, and the number of house building starts and first-time buyers is at their highest level for nine years.
“But we’re clear that to fix the broken housing market we need to build more homes and improve affordability. Our recent Housing White Paper set out the measures to do just that.”
The news follows recent warnings from local councils that central government must address the housing crisis, which has reportedly led to £2m a day being spend on temporary accommodation for homeless families.
Earlier this year, the Chartered Institute for Housing also published its own review of the UK’s housing market that found that only around £8bn of the £51bn that will be spent on housing up to 2021 would be used to build directly affordable homes.
PSE has approached the LGA for comment.