Homes are more affordable in over half of areas in Britain since the credit crunch

There have been major changes in British housing affordability since the economic downturn a decade ago with over half of local authority areas in England, Wales and Scotland more affordable.

But the changes vary considerably on a regional basis, according to an analysis based on local house price and earning ratios from the Yorkshire Building Society.

Overall 54% of areas are more affordable but in some local authority areas affordability has worsened by 61% while in others affordability has improved by up to 42% as changes in housing markets and wages vary.

However, many areas are still unaffordable to first time buyers, with the average price of a home now more than 20 times the average wage in some parts of London and the gap between the least and most affordable parts of Britain has almost doubled since the start of the economic downturn in 2007.

The areas where buying a home is more affordable include Edinburgh, Birmingham, Peterborough, Leeds and Harrogate due to wages increasing at a higher rate than property values over the last decade.

This is in contrast with London and most of the south of England, which are now far less affordable as house price rises have outstripped wage growth at a far higher rate.

‘Unsurprisingly, the data shows that there is a distinct divide between the north and south of the country when it comes to housing affordability, but this has become even more pronounced since the financial crash,’ said Andrew McPhillips, Yorkshire Building Society’s chief economist.

‘Across London and large swathes of southern England, which were already some of the most unaffordable parts of the country, it has become increasingly difficult for first time buyers and those wanting to move up the housing ladder to be able to buy their first or next home,’ he pointed out.

‘However, the north of England, Wales and Scotland present a different picture entirely, with many places, such as Edinburgh, Peterborough and Birmingham, becoming more affordable than they were before the credit crunch,’ he explained.

‘While some northern cities, such as Manchester, are less affordable than they were in 2007, in much of the north of England, Scotland and Wales, the gap between earnings and house prices is around a third of the average for London,’ he added.

Yorkshire Building Society analysed 10 years’ of Office of National Statistics earnings data and Land Registry house price data for 32 London boroughs and 324 local authorities across England, Scotland and Wales to create calculations of average house price to earnings ratios.

At a national level, since September 2007 affordability has improved by 0.6% in Britain overall, by 18.9% in Scotland, 17.2% in Wales but has worsened by 3.3% in England.

The research shows affordability has worsened most dramatically for London borrowers, where buying the average home is now less affordable in every borough than it was before the credit crunch, dropping on average by 39%. Council areas in the South East and the East of England have also seen a significant drop in affordability, with homes on average becoming 15% less affordable to buy.

The biggest improvements in affordability have come in the North East of England where affordability has increased by an average of 26%, followed by Scotland at 20%, Wales 18%, the North West 16%, and Yorkshire and the Humber 14%.

The Three Rivers council area in Hertfordshire and Haringey in north London saw the biggest declines in affordability since the economic crisis, with homes becoming 61% and 60% less affordable to buy over the past 10 years. Average house prices in these authority areas have increased to £519,992, a £187,101 rise, and £554,910, a £236,677 rise, respectively.

Indeed, the average home in Three Rivers now costs 15.83 times the average salary, with this figure at 17.51 in Haringey. The least affordable place in Britain is now Westminster, where a home costs 24.06 times the average wage.

By contrast, Inverclyde, near Glasgow in Scotland, saw the country’s biggest increase in affordability, with homes now 42% more affordable than in 2007 and costing 3.67 times the average salary, followed by North Ayrshire, where homes are 37% more affordable 3.55 times the average wage.

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