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ONS affordability data shows it’s not a gap but a chasm between earnings and prices

The gap between earnings and the affordability of homes in England and Wales is “extremely worrying”, according to one reaction to the latest figures from the Office for National Statistics (ONS).

In its latest statistical bulletin, analysing data from 1997 to 2016, the ONS shows the chasm that has opened up between earnings and prices. Main points include:

  • On average, working people could expect to pay around 7.6 times their annual earnings on purchasing a home in England and Wales in 2016, up from 3.6 times earnings in 1997.
  • The median price paid for residential property in England and Wales increased by 259% between 1997 and 2016; median individual annual earnings increased by 68% in the same time period.
  • The most affordable local authority in 2016 was Copeland, with house prices being on average 2.8 times greater than annual earnings, whereas Kensington and Chelsea was the least affordable with house prices being 38.5 times greater than annual earnings.
  • The gap between the least affordable and most affordable parts of England and Wales has increased over the last two decades; housing affordability has worsened in all local authority districts.
  • Housing affordability has worsened fastest in London boroughs over the last two decades.

The statistics reveal an “obviously significant jump over two decades” said Andy Sommerville, director at Search Acumen,

“Evidently, the 21st century has seen home-ownership pushed far into the distance for many young professionals but we are now in danger of ‘Generation Rent’ encompassing house hunters of all ages,” he added.

“The huge gap between earnings and affordability is extremely worrying. Prospective buyers are more stretched to buy property in every single local authority than they were before the turn of the millennium. It is not simply the fault of wages; it is down to the gaping hole between demand and supply in our property market.

“Various policy announcements over the past months have given some reassurance that this is on the government’s agenda, however Philip Hammond’s radio silence when it came to housing in the latest Budget led to some criticism from the industry. It is now up to the construction industry and the mortgage lenders to kick-start the recovery of our problematic sector and pave the way for a healthier and sustainable housing market.”

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