Surging house prices out-pacing homeowners' earnings 'in third of local areas'

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Surging house prices mean homes have typically "earned" more than their owners in nearly a third of local areas across the UK over the last two years, a report has found.

Average house prices have increased by more than average employees' net earnings in 31% of local authority districts over the two-year period, according to Halifax.

The proportion of areas where house price rises are out-pacing earnings has increased since 2015, when it stood at 28%.

London, the South East and South West of England and the East of England account for more than nine in 10 (93%) of the areas where house prices are rising by more than their owners are bringing in from their wages.

The biggest gap between rising property values and earnings over the last two years is in Haringey in London, Halifax said.

House prices there have increased by £91,450 more than the average wage over the last two years. This equates to a house price rising by £3,810 per month more than its owner is earning.

Harrow, also in London, came second on the list, with average house price growth there outpacing average earnings by £77,791.

St Albans in Hertfordshire was third. Property values in the popular area with London commuters have inflated by £72,995 more than the average wage coming in there.

The trend was also in evidence outside southern England, with Halifax pinpointing several places across the country where house price growth has significantly out-paced earnings over the last two years. 

In Harrogate in Yorkshire, house price growth has out-paced earnings by more than £12,500 over the last two years, while in Anglesey in Wales house price growth has eclipsed earnings by more than £1,600.

In Trafford in the North West, house prices have grown by around £14,000 more than the average wage coming in over the last two years, while in Warwick in the Midlands, house price growth has beaten earnings by over £21,000 typically.

By contrast, Halifax found there were no local authority districts in North East of England, Scotland and Northern Ireland where house price growth has out-paced earnings over the last two years.

The smallest gap in Scotland was found in East Dunbartonshire, where average house prices have earned £11,510 less than average wages over the last two years.

In Northern Ireland, the smallest gap was in Antrim and Newtownabbey, where house prices have earned £15,951 less than wages.

In the North East of England, the smallest gap was found in South Tyneside, where house prices have earned £3,324 less than wages. 

Martin Ellis, a housing economist at Halifax, said: "While it's no longer unusual for houses to 'earn' more than the people living in them in some places, there are clearly local impacts.

"Homeowners in these areas can build up large levels of equity quickly, but for potential buyers whose wages have failed to keep pace, the cost of buying a home has become more unaffordable during that time."

Figures from Halifax's house price database and Office for National Statistics (ONS) earnings figures were used to make the findings.