Housing affordability improves across Britain
The latest research from Yopa has found that the average house price across Britain now sits at 8.3 times the typical annual salary, with affordability improving over the last year, driven by more measured house price appreciation and stronger earnings growth. This has helped to reduce the house price to income ratio across six out of 11 areas of Britain, including London.
Yopa analysed* the latest Gov data looking at the median salary data alongside average house prices across Britain to calculate the house price to income ratio, before assessing how affordability has changed on an annual basis.
National picture shows improving affordability
The research shows that, across Great Britain, the average house price now sits at 8.3 times the average annual salary, down from 8.4 the previous year, with affordability also improving across six of 11 British regions/nations.
London has seen the largest improvement in affordability over the last year, with the ratio reducing from 14.5 to 13.9. The South East has also seen a notable reduction over the same period, along with the East of England, South West and West Midlands.
Elsewhere, Wales, the North West, Yorkshire and the Humber, Scotland, and the North East have each seen an increase of 0.1 in the house price to income ratio over the last year, whilst the average house price to income ratio has remained static across the East Midlands.
Despite seeing the largest reduction in the average house price to income ratio, London remains the least affordable region of Britain, with the average home now costing 13.9 times the typical annual salary.
Similarly, the South East ranks as the second least affordable despite the improvements seen over the last year, with a current house price to income ratio of 10.8, followed by the East of England at 9.9.
In contrast, the North East remains the most affordable region, with the average house price sitting at just 5.6 times the average annual earnings.
Top 20 least affordable areas of the property market
At a local authority level, London remains home to the majority of the least affordable areas in Britain – accounting for 12 of the top 20.
Kensington and Chelsea ranks as the least affordable, with the average house price of £1,178,497 sitting at 25.2 times the typical local salary of £46,690.
Westminster ranks second, with a ratio of 19.5, while Camden sits third at 17.8. Haringey, Richmond, Hammersmith and Fulham, Brent, Ealing, Hackney, Barnet, Islington and Harrow also make the top 20.
Outside of London, Elmbridge ranks as the least affordable area, with homes costing 17.4 times the average salary, while Mole Valley, Chichester, Sevenoaks, Hertsmere, Windsor and Maidenhead, Tandridge and Three Rivers also feature.
While these areas remain the least affordable, some have also seen some of the biggest improvements over the last year.
Biggest improvements in affordability
Kensington and Chelsea has seen the largest improvement, with the affordability ratio falling from 30.0 to 25.2. Camden has also seen a notable reduction, improving from 21.3 to 17.8, while Westminster has seen affordability improve from 22.5 to 19.5.
Other areas to see significant improvements include Tower Hamlets, where the ratio has reduced from 12.9 to 10.3, and Barnet, where it has fallen from 17.1 to 15.1. Outside of the capital, Merton, Lewes and St Albans have also seen notable improvements, highlighting that affordability conditions are beginning to ease across a broader range of markets.
Verona Frankish, Chief Executive Officer at Yopa, commented:
“While it’s encouraging to see affordability improve across many parts of Britain, it’s important to recognise that this has largely been driven by stronger earnings growth rather than any meaningful reduction in house prices, which remain high by historic standards.
London is a good example of this as, although affordability has improved over the last year, the average home still costs close to 14 times the typical salary, which underlines just how challenging it remains for many buyers.
That said, any improvement in the balance between house prices and earnings is a step in the right direction and, as this continues, it should help more buyers enter the market and support overall levels of activity.”
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