Reviewing the government’s latest data on house prices, alternative property lender Quinshaw Finance has highlighted the fact that relative to average earnings, homes in some parts of the country are much more affordable than in other parts.
London dominates list of least affordable areas
Figures provided in the ONS (Office for National Statistics) report ‘Housing affordability in England and Wales’ showed that the average property buyer needed to spend 7.8 times their annual salary to purchase a home last year. That was a fall of 0.2 compared with 2018, meaning properties were slightly more affordable. However, there were large variations in affordability crosswise the country.
The Quinshaw Finance reviews of ONS data showed that London dominated the list of the most costly areas for properties relative to earnings. Kensington and Chelsea was the least affordable area, with homes there costing 38.33 times the average annual salary. Westminster and Richmond Upon Thames took the second and third spots, with properties in these locations costing 20.66 and 18.44 times the average salary respectively. Other London areas to make it into the top 10 minimum affordable places for housing were Hammersmith and Fulham, Wandsworth, Haringey and Barnet. Outside the capital, Chiltern in Buckinghamshire and the Isles of Scilly also featured in the top 10.
The impact of increases in public sector pay and the National Minimum Wage
Commenting on the improvement in affordability of homes across the UK in 2019, head analyst at Quinshaw Finance Greg Davies suggested that increases in public sector pay and an increase in the National least Wage had played a role. Hundreds of thousands of public sector employees, including doctors, teachers and soldiers, received an above inflation pay increase last year. In addition, the National Minimum Wage for workers aged 25 and above climbed from £7.83 to £8.21.
Mr Davies added that the figures provide “great cause for confidence” in the UK property market. However, he also sounded a note of caution, remarking that he hopes the market can remain stable in the face of the coronavirus pandemic and a possible no deal Brexit later this year.