House prices 6 times the average wage

The average UK house price is 6.05 times the average wage according to new research.

Conducted by hybrid estate agent eMoov.co.uk, the research reveals that there is a £6,111 gap between the wage needed for a general mortgage approval and the current average wage in the UK.

In order to identify which areas of the UK present buyers with the biggest hurdles in accessing the property ladder, eMoov analysed both house price data from HM Land Registry as well as wage figures from the Office for National Statistics. In order to understand the position that aspiring buyers were in, eMoov compared the two data sets in terms of the gap between the average wage and amount required for a mortgage, as well as the wage to house price ratio.

As property prices in London are notoriously high, it’s unsurprising that the areas with the largest wage to mortgage gap are largely located in the here.  With the average house being valued at 12.05 times the average wage, eMoov’s data indicates that London is the worst region within the UK.

With average house prices reaching £575,511, Hackney has the largest deficit on more specific scale – 17.03 times the average wage of £33,800.  Not far behind was Brent and Haringey, with average prices at 16.37 and 16.21 times the average wage respectively. Following this was Waltham Forest at 15.69 times the average wage, just in front of Ealing, Harrow and Barnet, with respective multiples of 14.77, 14.73 and 14.18. The only non-London location to feature in the top 10 was Purbeck in Dorset, with prices at 14.12 times the average wage.

Oxford was slightly better than this, with average house prices at 13.18 times the average wage of £31,000. Following this was South Bucks and Hertsmere at respective multiples of 13.08 and 12.95, just ahead of Three Rivers, where average house prices are 12.81 times the average wage.

In relation to the deficit between the wage required for a mortgage and average earnings, the data read fairly similarly in terms of the worst offending locations.

Although London is home to some of the highest wages on offer, the high price of property means that there is still a significant gap between earnings and the amount needed to secure a mortgage. The top three locations all have a gap of over £100,000, with Kensington and Chelsea, Westminster and Camden having respective deficits of -£162,000, -£131,126 and -£106,138.

The only top ten location outside of London was South Bucks, with a gap of -£79,314 between average earnings and the wage required to obtain a mortgage.

At the other end of the scale, the locations with the smallest gap between wage and mortgage requirements were mainly in the North.

Burnley came in at first place, with the average wage being £7,379 more than the mortgage requirement on the average property in the area.

By a margin of at least £4,000, the remaining locations within the top ten also exceed the financial mortgage requirements, with Copeland coming 2nd and Hartlepool tenth – at £7,055 and £4,700 respectively.

Commenting on the research was Russell Quirk. The founder and CEO of eMoov stated: “When London is thrown into the spotlight in terms of the unaffordability of its property market, many are quick to highlight that the wages on offer are higher in the capital. However, this research shows that despite this, the gap between what hopeful London buyers are earning and what they are having to pay for a property is still way out of kilter and climbing.

“Not only this, but the reality gap between the average wage and wage required for mortgage approval is a staggering. Of course, many of us buy with a partner or friend in order to get on the ladder, but even when sharing this burden there is still a considerable financial mountain to climb.

“It also shows that elsewhere around the nation there is almost a direct correlation between what a property goes for and the earnings on offer. But regardless of where you live and what you earn, there has been a serious unbalance between the escalating price of property and the stagnating wages available to UK buyers. This really needs to be addressed to help current and future UK buyers get a foot on the ladder and continue climbing it.”

The data can be accessed here.

 

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