House Price to Average Wage Ratio at an 8-year High
According to Nationwide Building Society, a typical UK home is now six times the average annual earning, a height not seen since just before the brunt of the recession in March 2008. House prices have risen by around 20%, while wages trail behind at only 6%.
However Nationwide’s chief economist Robert Gardner was quick to put an optimistic spin on the announcement:
“The steady decline in borrowing costs over the same period has helped to lessen the impact on affordability for home buyers – Indeed, the typical mortgage payment expressed as a share of average take-home pay is little changed over the period, and is still in line with the long-run average”
The six fold gap is an average across the country; affordability ultimately still depends on where you live. Regions such as the North West, North East, Wales and Scotland have, relatively, more affordable housing markets.
Notwithstanding regional variations, the UK as a whole is still gripped by a housing crisis, and there are recently-surfaced doubts that the government will be able to hit the promised target of one million new homes by 2020.