"The widening gap between house prices and household incomes paints a worrying picture for those looking to get on the property ladder."
- Mark Eaton, COO of April Mortgages
The average house price across the UK is now 8.6 times the average household income, making homeownership largely unaffordable across the UK, new analysis from the ONS shows.
Changes in house prices are the main cause of the change in affordability, the ONS says, as its figures show that house prices have increased 2.7 times as fast as incomes in England.
Since 2017, all four countries have had an affordability ratio of 5.0 or above.
The average annual disposable household income was £35,000 during 2023 in England, while the average house price was £298,000, which is the equivalent to a ratio of 8.6 years of household income.
The average house price to disposable household income ratios were 5.8 in Wales, 5.6 in Scotland and 5.0 in Northern Ireland in 2023.
Since this series began, house prices have increased twice as quickly as household incomes in England; house prices in Wales and Scotland have also increased more rapidly than incomes, but the differences are more moderate.
For low-income households, average-priced homes in all four countries have been "unaffordable" (costing more than five years of income) throughout the series.
The data shows that only the 10% highest-income households in England could afford an average-priced home with fewer than five years of household income in 2023; in Wales this was the top 30%, the top 40% in Scotland, while in Northern Ireland an average-priced home was affordable with an average household income.
In London, the average home was not affordable for any household income decile.
Mark Eaton, COO of April Mortgages, commented: “The widening gap between house prices and household incomes paints a worrying picture for those looking to get on the property ladder.
“Homeownership is becoming increasingly out-of-reach for first-time buyers in particular, especially those on lower incomes and in the South of England.
“Mortgage providers need to adapt to these affordability challenges. We have seen unprecedented challenges for homeowners in recent years with mortgage repayments shifting upwards as a result of rising interest rates.
“The Bank of England is estimating this trend could get worse, with 4.4 million borrowers seeing their mortgage payments increase over the next three years.
“Long-term fixes can offer a financial security blanket in these circumstances and could also mean that you are able to borrow more in the first place - particularly useful if you are looking at properties above the UK average.
“The demand for good-quality housing is robust in this country, with millions of people hoping to escape the costly rental market. The main stumbling block highlighted in this report is the ability to save for a deposit.
“The Government should be working with mortgage providers and developers to help enable more first-time buyers to purchase their ideal home with smaller deposits."
