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House price affordability ‘improved across two-thirds of Britain over past year’

Nearly two-thirds of Britain has become more affordable for home-buyers in the past year, analysis has found.

Yorkshire Building Society, which looked at official wage and house price figures across local authorities, found that homes have become more affordable in 64% of the country over the past year.

Despite affordability improvements, average house prices in some areas are around 20 times the average local wage.

In other places, a home costs around three times earnings typically.

7.72 Average house price-to-earnings ratio across Britain

Yorkshire Building Society

And buying a home in nearly half (49%) of local authority areas is still less affordable now than before the financial crisis, the society found.

Yorkshire Building Society’s strategic economist, Nitesh Patel, said: “House prices have grown by an average of 43% since 2009 – twice as fast as earnings (21%) in the same period.

“The difficulty in affording to buy a home is one reason why house sales have not picked up in the past year, even though some of the key drivers for the housing market remain positive.

“The longer term outlook for people wanting to buy a home remains to be seen.

“Demand for home ownership is still strong and supply is limited, so, over the short to medium term, house prices could increase faster than earnings.

“This may continue to cause issues for home-buyers, particularly those buying their first home.”

The research found that housing affordability has particularly improved in parts of London and the South East of England over the past year, with areas such as South Buckinghamshire, Sevenoaks, Tower Hamlets, Watford and Canterbury seeing homes become more affordable relative to local wages.

Copeland in North West England, Blaenau Gwent in Wales, and the Shetland Islands in Scotland are among the places where house price affordability compared with wages has worsened – although many of these areas remain relatively affordable compared with some other parts of Britain.

Across Britain, house prices typically equate to 7.72 times wages.

The least affordable part of the country is Westminster in London, where properties cost nearly 20-and-a-half times average wages.

The most affordable is Burnley in Lancashire, where the average home costs around three times typical local earnings.

Here are the top 10 areas with the biggest improvements in housing affordability over the past year, according to Yorkshire Building Society, with the average house price-to-earnings ratio in the third quarter of 2019 and the percentage change in the ratio year-on-year. (A minus percentage number means that affordability has improved, a positive one means that it has worsened):

  1. South Buckinghamshire, South East, 13.68, minus 24%
  2. Runnymede, South East, 10.49, minus 20%
  3. Eden, North West, 7.06, minus 18%
  4. Sevenoaks, South East, 11.32, minus 17%
    =5. Lewes, South East, 9.81, minus 14%
    =5. Bracknell Forest, South East, 9.43, minus 14%
  5. Daventry, East Midlands, 8.39, minus 13%
  6. Tower Hamlets, London, 10.23, minus 12%
    =9. Canterbury, South East, 8.65, minus 11%
    =9. Watford, East of England, 10.15, minus 11%

Here are the top 10 areas where housing affordability has worsened the most over the past year, according to Yorkshire Building Society, with the average house price-to-earnings ratio in the third quarter of 2019 and the percentage change in the ratio year-on-year:

  1. Copeland, North West, 3.68, 32%
  2. Blaenau Gwent, Wales, 3.97, 14%
  3. Shetland Islands, Scotland, 5.48, 12%
  4. Harborough, East Midlands, 8.73, 11%
  5. Pembrokeshire, Wales, 7.40, 10%
    =6. North Devon, South West, 10.44, 9%
    =6. Bridgend, Wales, 5.61, 9%
    =8. North Kesteven, East Midlands, 7.35, 8%
    =8. South Derbyshire, East Midlands, 6.30, 8%
    =8. Forest Heath, East of England, 8.47, 8%

Here are the top 10 least affordable local authorities with the average house price-to-earnings ratio, and the percentage year-on-year change, according to Yorkshire Building Society:

  1. City of Westminster, London, 20.44, minus 8%
  2. Camden, London, 19.76, minus 1%
  3. Hammersmith and Fulham, London, 17.37, minus 7%
  4. Three Rivers, East of England, 15.88, 5%
  5. Hackney, London, 15.72, minus 3%
  6. Haringey, London, 15.36, minus 8%
  7. Brent, London, 15.27, minus 9%
  8. Richmond upon Thames, London, 15.26, minus 2%
  9. Ealing, London, 15.11, 4%
  10. Islington, London, 14.86, 0%

And here are the 10 most affordable local authorities, with the average house price-to-earnings ratio followed by the percentage year-on-year change:

  1. Burnley, North West, 3.05, minus 8%
  2. East Ayrshire, Scotland, 3.38, 5%
  3. North Ayrshire, Scotland, 3.61, 3%
  4. Copeland, North West, 3.68, 32%
  5. North Lanarkshire, Scotland, 3.70, minus 3%
  6. County Durham, North East, 3.75, minus 5%
  7. Renfrewshire, Scotland, 3.82, minus 4%
  8. Barrow-in-Furness, North West, 3.83, 5%
  9. Inverclyde, Scotland, 3.92, 5%
  10. Hyndburn, North West, 3.94, minus 9%

Source: Express and Star