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Homes cost 10.6 times earnings despite wage rises: Wayhome  

Homes cost 10.6 times earnings despite wage rises: Wayhome  

The average UK home costs £285,000, which is 10.6 times the average salary, despite wages outpacing house prices, data from Wayhome shows.  

This gap, despite closing over the last year, “fails to make a dent in the huge financial obstacle that homebuyers face when looking to get a foot on the ladder,” says the gradual homeownership firm.   

The average UK salary rose by 6.4% to £26,796 from a year ago, according to Office for National Statistics figures released today.  

The Bank of England has previously warned that high pay rises are contributing to the UK’s high rising prices, which has seen the central bank hike the base rate 12 times in a row to 4.5%.  

The home lender says: “This notable rate of wage growth comes in contrast to a cooling housing market that has seen house prices increase at an annual rate of just 4.1% over the last year — 2.3% less than the average earnings.”  

It points out that in London, despite house prices climbing at the lowest annual rate of all UK regions, by just 1.5% in the last year, the region has also seen earnings lift by just 4.6% — the third lowest rate of all UK regions.   

This means the average home in the capital costs 16.4 times the average earnings in the city, the highest in the country.  

This compares with the next highest ratios in the South East, at 13.8 times, the East of England, 12.8 times, and the South West, 12.7 times.  

The North East remains the most affordable UK region for homebuyers, with the current average house price of £156,912, at 6.2 times average annual earnings, followed by Scotland, at 6.8 times, and Northern Ireland, at 7 times.  

Wayhome co-founder and chief executive Nigel Purves says: “The latest government figures on earnings will bring some reassurance to the nation’s homebuyers, as wages continue to increase at a quicker pace than house prices.   

“However, when you consider the bigger picture, it fails to make a dent in the huge financial obstacle that homebuyers face when looking to get a foot on the ladder.   

“Even in this highly unusual landscape where house prices growth is lagging behind wages, the average UK property is still over ten times that of the average annual earnings.   

“For many, this makes the task of saving a deposit and securing the required mortgage unobtainable and this will remain the case until we see a serious market correction.”  

The post Homes cost 10.6 times earnings despite wage rises: Wayhome   appeared first on Mortgage Strategy.

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