A report from the Office for National Statistics reveals an improvement in housing affordability in England and Wales, driven by wage growth outpacing house price increases.
In 2023, an improvement in housing affordability was observed across three-quarters of local authorities in England and Wales, driven by wage growth surpassing the increase in house prices, according to the Office for National Statistics (ONS). This positive shift saw a decrease in average house price-to-earnings ratios, making it more feasible for individuals to purchase homes within their local authority areas.
The ONS report highlighted that average earnings rose in 88% of areas, which helped counterbalance the rise in house prices, noted in 69% of localities. Despite this overall improvement, disparities in affordability remained stark across different regions. For instance, Kensington and Chelsea in London maintained its position as the least affordable area with an average house price-to-earnings ratio of 34.3. Conversely, Burnley in Lancashire emerged as the most affordable area, boasting a ratio of 3.7.
In terms of average home prices, England saw properties selling for £290,000, requiring full-time employees to spend approximately 8.3 times their earnings on a home. This marked an improvement compared to 2022’s ratio of 8.5. Wales experienced a similar trend with the affordability ratio dropping from 6.4 in 2022 to 6.1 in 2023, with the average home price recorded at £196,500.
The report acknowledged that while the housing market demonstrated signs of becoming more accessible, challenges persisted, particularly in high-demand areas like London. Further concerns were raised regarding potential impacts on affordability due to mortgage rate increases in response to the Bank of England’s base rate adjustments.
In summary, 2023 saw a notable improvement in the affordability of housing in England and Wales, albeit with continued regional disparities in accessibility. The long-term outlook for the UK’s housing market affordability remains intertwined with broader economic conditions and monetary policy adjustments.