With borrowing costs at an all‑time low, and new mortgage customers being incentivised by attractive interest rates, the Office for National Statistics (ONS) has issued gloomy news: the affordability gap is still increasing. The typical property now costs 7.6 times the average earnings of working people in England and Wales.
In 2007, the average buyer paid 7.2 of their annual earnings on property. The affordability gap grew sharply between 2015 and 2016, increasing from 7.4 to 7.6 times earnings.
First time buyers’ wages have stagnated through this period, making property ownership even more expensive.
Half of all homeowners have no borrowings at all, and it is estimated that up to two fifths of homes are bought and sold within this group. The value in their property for many of these homeowners comprises largely unearned and untaxed money, and they are unwittingly helping to keep house prices buoyant.
According to one property company, Northampton has the fastest moving property market in the UK. Zoopla recorded sales of properties in Northampton listed on its website being marked as ‘under offer’ inside an average of 27 days. Milton Keynes and Croydon were the next on the list, showing accepted offers within 29 days and 30 days. The fastest offers regionally were in the South East and East of England, compared to sales in Wales which at 66 days took the longest.
Most and least expensive
Seven of the ten least affordable areas in which to buy property are unsurprisingly in London. Homes in Kensington and Chelsea now typically cost 38 times the average annual income of those living in the area, up from 13 times earnings in 1999. Westminster buyers paid 24 times average earnings last year, and properties in Hammersmith and Fulham cost 21 times earnings.
While sales in Wales were slower, the value of homes in Neath, Port Talbot and Blaenau Gwent were still 3.6 times earnings. Copeland in Cumbria was the most affordable place to buy, where property was 2.8 times average local earnings.
For advice from Independent Chartered Surveyors on buying or selling property in England and Wales, contact www.propertysurveying.co.uk