UK property prices increase more than earnings in London and South East
Over the past two years average house prices have increased by more than the average employee’s net earnings in almost one in five local authority districts across the UK, according to new research.
The vast majority of these areas are in London, the South East, and East, representing 68 of the 73, the data from lender the Halifax shows, and eight London boroughs appeared in the top 10.
The largest difference was in Hammersmith and Fulham, where house prices increased by an average of £199,930 over the last two years, exceeding average take home earnings in the area by £143,232.
Cotswold was the best performer outside London, the South East and East with house price gains exceeding earnings by £31,222. The Leicestershire areas of Melton and Harborough also saw average house prices increase by more than earnings in 2013 and 2014 with price gains in excess of earnings by £9,358 and £6,938 respectively.
The research also shows that over the past five years some 23 local areas in the UK have seen average house prices increase by more than total average pay. In Islington, average property prices have increased by £258,498, surpassing average take-home pay during the period by £123,041.
Again, the top six performers are all in London, but outside the capital, Elmbridge in Surrey has seen the biggest rise in prices in relation to total earnings in the past five years at £51,854. All 23 areas are in London and the South East.
House prices nationally increased by 9% in 2014, the biggest annual rise since 2007. Average prices rose particularly sharply in London at 16% and the South East at 11%, and as a result, average prices increased by more than total take home pay in one quarter of districts.
The majority of these areas are in London and the south of England. Most of the best performers outside the south are in the West Midlands including Malvern Hills, Wychavon and South Staffordshire. While, over the past decade, house prices have increased by more than total pay in just two areas across the UK; Hackney and Hammersmith and Fulham, all in London.
‘The housing market recovery over the past couple of years has resulted in some substantial prices rises in some areas of the country, particularly in London and the South East. This has resulted in homes increasing in value by more than total take home earnings for the average home owner in some areas of the country,’ said Martin Ellis, housing economist at the Halifax.
‘This is good news for some home owners. At the same time, it is challenging news for those looking to buy their first home in such areas, with prices being pushed out of range for many young people,’ he added.