House prices in the UK are less affordable than they have ever been since records began, according to official figures.
The latest house price survey from the Office for National Statistics (ONS) found that the average UK house now costs 7.6 times the average wage, compared with 3.6 times in 1997.
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This means that house prices have increased by 259 per cent during the period, while earnings have risen by just 68 per cent.
Rises driven by London
London has seen prices rise most dramatically, with the average property in the capital now costing 12.9 times earnings – nearly twice the multiple seen in 2002. The disparity is most acute in the London borough of Kensington and Chelsea, where a resident would pay 26.4 times average earnings to secure a house.
But properties in the North East now cost 5.1 times the average wage – down on their 2007 peak of 5.8 times, but still significantly higher than the 3.3 multiple seen in 2002.
Price gap widening
The survey also showed a stark gap in median property prices across the country. The highest median price was seen in Westminster, where the average property costs £2.92 million, while the lowest was recorded in part of County Durham, at £24,500.
According to the ONS, “the house price gap has been growing in recent years.” The figures suggest that the cheapest properties are becoming cheaper, while the most expensive are increasing in price.
Home ownership in Britain is now at its lowest level since 1985, and is nearly 10 per cent lower than at its 2003 peak. Some 62.9 per cent of Britons now own their property, compared with 71 per cent in 2003.
What does this mean for landlords?
High house prices and the fall in home ownership mean that rental demand is staying strong, and Simply Business data shows that most landlords plan to raise their rent this year. However, steep property prices coupled with tough buy-to-let tax changes could squeeze some landlords out of the market.
And the growing gap between the most expensive parts of the country and the cheapest parts of the country can be seen in rental yield too. In central London, rental yields have fallen, while the cheaper North East has seen a surge in yields and a high level of optimism amongst local landlords.
How do you think property prices will affect you? Tell us in the comments.