Economy

Affordability gap doubles since financial crisis: YBS

Homes across half of the United Kingdom are more affordable than before the financial crisis, with Birmingham, Glasgow and Leeds among the places where the gap between earnings and house prices has fallen, a study has found.

Yorkshire Building Society analysed 10 years of ONS earnings data and Land Registry house price data for 32 London boroughs and 324 local authorities across England, Scotland and Wales to create calculations of average house price to earnings ratios. In some areas, property prices are still below what they were, but in other areas property prices have continued to increase, just not at the speed of earnings.

"The north of England, Wales and Scotland present a different picture entirely, with many places, such as Edinburgh, Peterborough and Birmingham, becoming more affordable than they were before the credit crunch". There, the average house is now £191,829.64 compared to £201,692.83 in 2007.

HOMES in York are 14 per cent less affordable now than in 2007 - bucking the trend for Yorkshire, according to new research.

Inverclyde, near Glasgow in Scotland, saw the country's biggest increase in affordability, with homes now 42% more affordable than in 2007 and costing 3.67 times the average salary, followed by North Ayrshire, where homes are 37% more affordable 3.55 times the average wage.

"The differential is a risk to London's competitiveness in terms of its attractiveness to talent. They are less likely to start their career in London than in Bristol or Birmingham".

Just York, Craven and the East Riding are less affordable than they were a decade ago.

"It is the city where affordability has reduced the most". Homes in the Three Rivers district council area, which is bisected by the M25, cost nearly 16 times average earnings, compared with 10 times in 2007.

The next two biggest movers in that direction were the London borough of Haringey, where house prices are 17.5 times that area's typical earnings, and the London borough of Westminster which sees the average home cost more than £1m, or 24 times average earnings there.

Yorkshire Building Society compared local house prices and incomes, and found that in nearly all of Yorkshire, housing is more affordable than it was in 2007 - however, researchers say this is because house prices haven't fully got back to where they were in 2007 at the previous market peak.



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