Homes more affordable in two-thirds of UK in 2019

Changes in local house price affordability show that homes have become more affordable in two-thirds of the UK over the past year, according to new analysis by Yorkshire Building Society.

Research revealed that buying a home has become more affordable in 64% of local authority areas in the UK over the last year – although the society revealed it is still less affordable than it was before the 2007 financial crisis in 49% of local authority areas.

Yorkshire Building Society’s research, which measured the relationship between the cost of homes and earnings at a local authority level, found that in 2019, wages have increased faster than house prices in 233 areas – improving affordability for homebuyers.

In some areas of the UK, however, where prices have stalled or fallen, the research showed prices of homes relative to earnings had dropped by more than 20%.

Yorkshire Building Society strategic economist, Nitesh Patel, commented: “In the past year, we’ve seen house price growth continue to slow, stall completely, or even fall. At the same time, salaries have increased, which means wage growth has begun to catch up with house price growth. This is why we’ve seen more affordable house prices in the vast majority of places.

“This is most striking in London, where six of the capital’s boroughs occupy the ten largest increases in house price affordability. But it’s important to remember, this is all relative. London still has some way to go before house prices are truly affordable for someone on median earnings.”

Yorkshire Building Society analysed earnings data from the ONS as well as Land Registry house price data for 32 London boroughs, and 324 local authorities across England, Scotland and Wales to create its calculations of average house price to earnings ratios.

Patel added that house prices had grown by an average of 43% since 2009 - twice as fast as earnings in the same period.

He continued: “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 housing market remain positive.

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

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