There has been only a slight fall in property affordability in 2018, according to the Office for National Statistics (ONS).

Its latest property affordability data found that the typical full-time worker will need to pay 7.8 times their annual salary when purchasing a property in England and Wales.

The ONS said that the ratio had increased by 0.8 per cent over the last year, but noted huge regional variations in affordability for purchasers.

For example, Copeland in the North West of England, remains the most affordable local authority, with average house prices around 2.5 times the typical annual earnings. By contrast, in Kensington and Chelsea, average house prices are 44.5 times typical workplace-based average annual earnings.

Even within different areas of the capital, the affordability ratio varies sharply, with a range of 34.7 between the most and least affordable areas.

The troubles of the south east

According to the data, a total of 77 local authorities in England and Wales saw housing affordability worsen over the last five years, with around three-quarters of them located in London, the East or the South East.

There were no local authorities in which affordability was found to have significantly improved over the same time period.
In London just five boroughs did not see affordability worsen significantly: Hackney, Wandsworth, Harrow, Hounslow and Richmond Upon Thames.

Affordability is even more of a challenge if buyers are looking to purchase a new-build property.

The ONS data revealed that when purchasing a new home, buyers can expect to spend 9.6 times their earnings, compared to 7.6 times their salary when buying an existing home.

Buying a ‘pipe dream’ for many

Andrew Montlake, director of Coreco, said that the figures were a particularly stark reminder of just how difficult it is for would-be buyers to get onto the housing ladder in London, adding: “That affordability hasn’t improved in one single local authority is proof positive of how the lack of supply has propped up house prices despite ongoing market uncertainty.”

Montlake also argued that while getting onto the ladder in certain regions was “eminently achievable”, in others it bordered on the impossible for a significant chunk of the population.

“Unless you’ve got a sizeable deposit and a pretty decent income, buying in the south east corner of the UK is little more than a pipe dream,” he continued.

Mortgage affordability improving

Shaun Church, director at Private Finance, said that while housing affordability may have remained relatively unchanged, mortgage affordability has improved considerably over the last year.

He continued: “The upfront cost of purchasing a home undeniably remains a significant financial hurdle for first time buyers to overcome, however thanks to falling mortgage rates, the ongoing cost of owning a home and servicing a mortgage is in fact more affordable than it was ten years ago.”