Affordability in the housing market is improving from a combination of modest house price inflation and strong wage growth, new analysis by Halifax has highlighted.

House prices have risen by 3.8% compared to a year ago, according to data from the most recent Halifax House Price Index, reaching an average of £292,508.

At the same time, annual earnings for full-time workers climbed by +5% to an average of £44,667, over the same period.

The figures mean wage growth has outpaced house price inflation, putting the house price to income ratio at 6.55. This is down from 6.62 last year, Halifax highlighted, with the house price to earnings ratio gradually reducing since it reached a record high of 7.24 in the summer of 2022.

Head of Halifax Mortgages, Amanda Bryden, commented: “Housing affordability has improved over the past year, thanks to stabilising property prices, strong wage growth, and easing interest rates. That’s great news for first-time buyers and existing homeowners looking to remortgage or move up the property ladder.

“However, while homes are becoming more affordable, the progress has been gradual. Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.”

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