London home costs 14 times average earnings, index shows

A home in London now costs over 14 times average earnings typically - the highest level on record - according to an index.

A lack of supply combined with a strong demand for housing in London has pushed house prices up by 86% since 2009, property analysts Hometrack said.

The house price-to-earnings ratio in London is more than double that across the UK generally, where a buyer can expect to spend around six-and-a-half times their annual wage to purchase a home.

According to Hometrack's figures, the average house price in London is £482,800 - more than 14 times the average annual wage at £33,720.

House prices in Oxford and Cambridge also command around 13 times local annual wages, Hometrack's report said.

And strong house price growth in Bristol over the last two years means a home there now costs over nine times the average local wage.

Richard Donnell, insight director at Hometrack, said there had been a slowdown in house price growth in London as affordability had become more stretched.

London house prices are around 9% higher than a year ago - the slowest annual growth seen in around three years.

Mr Donnell said: "In cities where affordability levels are stretched, fewer households are able to participate in the market and this reduces levels of turnover and leads to lower levels of house price growth.

"This process is under way in London where the annual rate of growth is close to its lowest level for three years and where the top end of the market is already registering falling prices."

In Wednesday's Autumn Statement, the Government unveiled a package of measures to boost housebuilding, including a new £2.3 billion Housing Infrastructure Fund to deliver up to 100,000 new homes in areas of high demand.

London will receive £3.15 billion as its share of national affordable housing funding to deliver more than 90,000 homes.