Quinshaw Finance praises confidence in the property market as house affordability improves for first time since 2015
Quinshaw Finance has reviewed the government’s latest data on house prices and annual earnings which reveal the affordability of homes across the UK.
With the data showing that housing became more affordable in 2019 compared to the previous year, Greg Davies, head analyst at Quinshaw Finance, believes that the increase in minimum wage and pay rises for public sector workers had a positive effect on the property market.
According to the Office Of National Statistics’s report “Housing affordability in England and Wales”, the average British citizen needed to spend 7.8 times their annual salary in 2019 to purchase a home. This decreased by 0.2 compared to the same data from 2018.
The increase in the median gross of annual workplace earnings is one of the reasons homes became more affordable. The average salary rose from £29,667 to £30,500 between 2018 and 2019.
There was also an increase in the average house price, which went up by £750 between 2018 and 2019. However, earnings grew faster than house prices in over half of local authority districts across the United Kingdom.
Responding to these figures, Greg Davies, head analyst at property lender Quinshaw Finance, said: “We are pleased to see that homes became more affordable in the United Kingdom last year.”
“This is the first time these figures have improved since 2015. Given that this happened amid the instability of Brexit negotiations and the general election, it is cause for great confidence in the property market.”
“We believe the Government’s decision to increase the minimum wage from £7.83 to £8.21 per hour last April helped make homes more affordable for many people across the United Kingdom, as did the pay rise for hundreds of thousands of public sector workers.”
“It is important that homes continue to be affordable, however. With the coronavirus pandemic hitting the United Kingdom and the possibility of a no deal Brexit later this year, we hope that the property market is able to remain stable.”
The Office Of National Statistics also revealed the most and least affordable places to live in the United Kingdom by comparing the average house price in each local authority with the average income.
Copeland was the most affordable place to live in 2019. You would only need to spend 2.67 times your annual workplace salary to purchase a home in the Cumbrian borough, which averages at around £120,000.
Meanwhile, Kensington and Chelsea was found to be the least affordable place. With house prices averaging at around £1,256,000, you would need to 38.3 times your annual salary to afford a home in the affluent London borough. It is one of eight London boroughs which ranked among the ten least affordable areas in the UK.
The ten most affordable places to live are:
Copeland, Cumbria - 2.67 times the average annual salary Blaenau Gwent, Wales - 3.17 times the average annual salary Barrow-in-Furness, Cumbria - 3.44 times the average annual salary Hyndburn, Wales - 3.59 times the average annual salary Neath Port Talbot, Wales - 3.68 times the average annual salary Burnley, Lancashire - 3.77 times the average annual salary Rhondda Cynon Taf, Wales - 4 times the average annual salary Merthyr Tydfil, Wales - 4.02 times the average annual salary Derby, Derbyshire - 4.06 times the average annual salary County Durham, Durham - 4.07 times the average annual salary
The ten least affordable places to live are:
Kensington and Chelsea, London - 38.33 times the average annual salary Westminster, London - 20.66 times the average annual salary Richmond Upon Thames, London - 18.44 times the average annual salary Camden, London - 18.29 times the average annual salary Hammersmith and Fulham, London - 18.16 times the average annual salary Chiltern, Buckinghamshire - 17.94 times the average annual salary Isles Of Scilly - 17.71 times the average annual salary Wandsworth, London - 17.56 times the average annual salary Haringley, London - 16.91 times the average annual salary Barnet, London - 16.76 times the average annual salary