A fifth of UK areas now see homes earning more than their occupants

Posted on Sunday, April 22, 2018

New research from Halifax has shown that roughly 18% of UK local areas have seen average house prices increase by more than total average pay over the last two years.

According to the findings, house prices in Barnet in London exceeded average take-home earnings in the area by £52,256, the highest in the country and equating to £2,177 per month. The next biggest gap can be seen in North Hertfordshire in the East of England (£40,903), the only place outside London and the South East to feature in the top 10.

The data revealed that the difference between house prices and earnings in Barnet equates to 73% of the average deposit on UK house purchases (£71,297) and is £18,850 more than the average deposit in Northern Ireland (£33,376), the region with the lowest in the UK.

However, the data also found that the proportion of areas where house prices are outpacing earnings has dropped from 31% in 2016 to 18% in 2017, or from 119 areas to 71.

The research also highlighted a continuing North/ South divide, with 86% (61 out of the 71) of areas where the average house price rise is greater than local median earnings over the last two years in London, the South East, South West or East of England. This share is down slightly from the last year when 93% (111 of 119) of areas came from these four regions.

The top performers outside southern England include Harborough in the East Midlands, with house price gains £19,662 more than earnings over 2016 and 2017 (£73,916 v £54,254). Elsewhere, Ribble Valley in the North West (£8,217), Tamworth in the West Midlands (£3,226) and Denbighshire in Wales (£793) all saw house prices outperform wages.

Over the past five years, 73 local areas in the UK (19% of the total) have seen average house prices increase by more than total average pay, with nine of the top 10 areas in London.

Three areas have recorded a differential of over £100,000 over the past five years.

The greatest was again in Barnet, where average property prices have increased by £246,999, surpassing average take-home pay during the period by £116,734. Barnet is followed by Merton (£115,892) and then Watham Forest (£103,227). Hertsmere (£71,281) in the East of England, is the only LAD outside London to make the top 10.

Russell Galley, Managing Director at Halifax, said: “Over the past two years, we have seen house price growth and earnings converge at a national level, leading to a drop in the total number of areas where the average house price rise is greater than owners’ take-home earnings.

Despite the slowdown in house price growth in southern England, it has still outpaced wages across most of the region. This means that middle earners are also facing a challenge getting on to the property ladder.”

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