ONS: Full-time employees require 7.8 times annual salary to purchase a home
In 2020, full-time employees in England on average required 7.8 times their annual earnings to purchasing a home according to the ONS Housing Affordability Report for England and Wales 2020.
The report shows that this figure is in line with 2019.
In Wales in 2020, full-time employees on average needed to spend 5.9 times their workplace-based annual earnings to purchasing a home, also in line with 2019.
Despite this, at a local level, earnings grew faster than house prices in nearly 60% of local authority districts.
As a result, this has led to improvements in housing affordability in these areas; however, these were not statistically significant changes.
In 2020, new dwellings remained less affordable than existing dwellings in both England and Wales.
The gap between the most and least affordable local authorities continued to decrease in 2020.
Nigel Purves, chief executive of Wayhome, said: “While last year’s ratio of employee earnings to house prices in England was relatively unchanged from 2019, the fact most full-time workers would still need to spend at least 7.8 times their annual earnings to be able to afford a home in this country is concerning.
“What’s more, for those interested in new build properties in England that ratio shoots up, with buyers expecting to spend at least 9.6 times their annual earnings – that’s 27% higher for new homes than it is for existing properties.
“That said, earnings in England increased by 3.5% last year, compared to house prices which rose 2.9% – a glimmer of good news for would-be buyers.
“But in light of the pandemic, questions abound over whether this trend will continue, and getting a mortgage still remains out of reach for a huge number of people, even if they can afford a deposit.
“People shouldn’t be shackled by these affordability constraints, or driven into homes that aren’t suitable for their needs.
“It’s high time the industry re-evaluates what it means to be a homeowner and concentrates on supporting ‘reluctant renters’ in their ambitions to own a home.”