House price affordability at 10-year low
The cost of buying a house is at a 10-year high when taking salaries into account, Benham and Reeves research has found.
Despite strong wage growth resulting in the average net salary hitting £25,123 in 2020, a typical house price of £249,633 means prices are now nearly 10 times the average salary.
London is the least affordable (15.74 times the average salary), with the South East (12.46) and South West (12.46) also remaining some of the worst regions for property affordability.
The North East still ranks as the most affordable region (6.34), along with Northern Ireland (6.48) and Scotland (6.90).
Marc von Grundherr, director of Benham and Reeves, said: “The UK’s house price to income ratio reached its highest point in a decade by the end of 2020, no doubt driven by a steep jump in house prices brought about by the market adrenaline shot of a stamp duty holiday.
“Although some regions still remain below previous peaks, this new national high demonstrates the huge financial cost of climbing the property ladder in the UK, a cost that grows largest still for those attempting to take their first step.
“Unfortunately, even with stronger wage growth in recent years, earnings have failed to keep pace with house prices and so it’s very likely we could see this issue of affordability grow larger before it starts to reduce. “
The average first-time buyer now pays £209,163 based on an annual net salary of £23,643.