Average house prices in Wales over 12 times the income of poorest households, new data shows
The average house price in Wales is 12 times the yearly income of the poorest 10% of households, and growing, new data released by the ONS has shown.
In the financial year ending 31 March last year, the average home sold in Wales cost the equivalent of six times the average annual disposable household income, figures published by the ONS showed.
This compared with only 3.96 times the average annual disposable income when the figures began to be collected in 1999.
For those in the 10th percentile of household income, however, they would have to save their entire income for 12.09 years to be able to afford the average home.
For those in the 90tyh percentile – the top 10% of income earners – they would only need to save their income for 3.18 years to be able to buy the average house.
In England, the average home cost 8.7 times the average annual disposable household income, while in Scotland the figure was 5.5. Figure for England were skewed by house prices in London and the South East, while house prices in the north of the country were comparable in affordability to Wales.
In Wales, purchase affordability ratios for the average home were still below the peak in 2007, before the financial crash, but had edged upwards once more during the pandemic.
Affordability ratios in England were already worse than at any point since the series began in 1999.
Estimates of the median (average) household income and median house price for each country were:
- in England, £275,000 for median house price and £31,800 for median income, which is equivalent to a ratio of 8.7 years of income
- in Wales, £176,000 for median house price and £29,400 for median income, which is a ratio of 6.0 years of income
- in Scotland, £166,000 for median house price and £30,300 for median income, which is a ratio of 5.5 years of income
ONS figures were not yet available for 2022 or on a regional basis for Wales, but last month Halifax said that the west of Wales has seen the “biggest deterioration in house price affordability” in the UK over the last two years.
Pembrokeshire was the county worst hit in the whole of the UK for house price affordability, with Carmarthenshire and Ceredigion also in the top five.
The impact of surging property prices throughout the pandemic has reduced housing affordability to the lowest level on record, according to new research by Halifax, the UK’s biggest mortgage lender.
Halifax said that Pembrokeshire had been particularly hard hit as buyer demand has soared in rural locations offering greater space during the pandemic.
The house price to earnings ratio in Pembrokeshire has risen from 4.3 at the beginning of 2020, to now stand at 6.9 (+2.6).
In Carmarthenshire and Ceredigion people who needed 4.6 their earnings to buy a home now needed 6.5 their earnings to do so, two years later.
Andrew Asaam, Mortgages Director, Halifax, commented: “There’s no question that the economics of buying a home have changed significantly over the last couple of years. Soaring property prices and slower wage growth have combined to stretch traditional measures of housing affordability.
“However, we also know from strong transaction levels that demand has remained extremely strong over that period, both from home-movers seeking bigger properties, and first-time buyers taking their first steps onto the ladder.
“With interest rates on the rise as a means of combatting inflation, it’s unlikely that house prices will continue to grow at the pace we’ve seen recently. This should see the gap between average earnings and property prices narrowing over time.
“It’s also important to highlight the responsible approach taken to mortgage lending in this environment, with lenders conducting thorough checks to ensure repayments are manageable even if interest rates rise more sharply in future.”
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