Average UK house price hits eye-watering eight times average salary
House prices have continued their ascent in the UK, with the average home now costing more than eight times the average salary.
Over the past year, the average house price of UK cities has grown by 10.3%, while earnings for those living and working in cities rose just 2.1%, according to Halifax.
Unaffordability is now at its highest level since Halifax began collecting the data in 2011 — it is likely to be the least affordable market ever due to trends since the financial crisis of climbing house prices and stagnating wages.
While city house prices rose to £287,440 ($398,724), up 10.3%, wages in the same locations only rose by 2.1% to £35,677, the UK's largest mortgage lender found.
This increased gap between house prices and earnings has lifted the PE ratio to 8.1, from 7.5 in 2020, meaning buying a city home has become less affordable for those that live and work in them.
After sitting at 5.6 from 2011 to 2013, the PE ratio for UK cities has now risen for eight successive years.
Perhaps contrary to some perceptions, overall, cities are marginally more affordable than the average for the UK as a whole, which has a PE ratio of 8.5 (UK average house price: £327,691, average earnings: £38,600).
This pattern of greater city affordability has been visible in the data since 2014, and in 2021 the gap between PE for cities and all UK homes increased to its widest point, of 0.43. This widening over the last 12 months may reflect home-movers looking for more space to accommodate homeworking during the pandemic.
Read more: 'Good time to be looking for new job' as UK starting salaries surge
Londonderry retained its position as the UK’s most affordable city for the third year in a row, with a PE ratio of 4.7.
A 13% increase in average earnings last year saw Carlisle join Bradford in second place (both 4.8), ahead of Stirling, Aberdeen, and Glasgow, all with a PE ratio of 5.4.
"For city home-movers who want to stay in their area, the level of equity in their current property is likely to be an important factor in how affordable the local area is for them, whereas raising a deposit remains an issue for many first-time buyers," said Halifax managing directtor Russell Galley.
"Nevertheless, some areas, like Carlisle, saw affordability improve, and cities like Bradford and Glasgow are some of the more affordable in the country.”
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