Well, everywhere except one part of the country
Even though some mortgage lenders have been increasing multiples to help borrowers, the market doesn’t seem to want to let homebuyers catch up. In fact, only 10% of the population in England can actually afford to buy an averagely priced house according to new data.
The latest analysis from the Office for National Statistics (ONS) reveals the severe affordability crisis is across the entire UK housing market, apart from just one region. This situation underscores the extent of the gap between rising house prices and stagnant income growth.
Stark affordability ratios
According to the ONS, buying a home in England now requires 8.6 years of average household disposable income, which stood at £35,000 in the last financial year. With the average house price pegged at £298,000 in 2022, affordability has almost halved since 1999, when the ratio was significantly lower.
In other parts of the UK, the affordability picture is slightly better:
- Wales: 5.8 years of income.
- Scotland: 5.6 years.
- Northern Ireland: 5 years, making it the only region where average homes remain within reach for households with median incomes.
Unequal impact across regions
The data highlights sharp regional disparities. In London, even households within the top 10% of local earners—those earning at least £89,901 annually—struggle to afford a home. The average house price in the capital reached an eye-watering £530,000 last year, equivalent to 14.1 years of the median income. For the bottom 10% of earners, purchasing an average home in London would take an astonishing 34.7 years of income.
Even the North East of England, the country's most affordable region, still only offers affordability to the top 40% of earners, showing just how bad the problem is.
Who can afford a home?
The ONS defines housing affordability as a house priced at less than five years of disposable household income. Based on this metric:
- In England, only households earning £69,677 or more—a threshold placing them in the top 10%—can afford an average home.
- In Wales and Scotland, the threshold expands to include the top 30% and 40% of earners, respectively.
- Northern Ireland remains the outlier, with homes affordable to households earning average incomes.
A policy conundrum
This housing crisis presents a significant challenge for political leaders. Labour, led by Keir Starmer, has pledged to tackle the issue by building 1.5 million homes in England by the next election, but the shockwaves of his Chancellor’s budget are still reverberating through mortgage markets – having the reverse effect on affordability. While ambitious, experts warn that increasing housing supply alone may not be enough to resolve the affordability problem. The need for systemic reforms in planning, coupled with large-scale social housing projects, has been emphasized by housing advocates.
Even in the best-case scenario, the crisis highlights the depth of structural issues that have allowed house prices to outpace incomes for decades. With house prices increasing 2.7 times faster than incomes in England since the late 1990s, reversing the trend will require bold interventions.
A grim outlook for the future
Despite differences across the UK, one commonality persists: low-income households remain locked out of the housing market. For the bottom 10% of earners, affordability ratios are entirely out of reach across all regions, from London’s exorbitant prices to Northern Ireland’s relatively modest market.
