Housing affordability gap between most and least expensive areas at 20-year high

The affordability gap between the most and least expensive places to live in England and Wales has increased to the widest point since records started more than 20 years ago, Office for National Statistics (ONS) figures show.

Kensington and Chelsea in London remained the least affordable local authority in 2018 – with average house prices equating to a huge 44.5 times workplace-based average annual earnings.

Copeland in Cumbria remained the most affordable local authority, with average house prices being 2.5 times average workplace-based annual earnings.

The ONS said that, while housing affordability across England and Wales generally remained unchanged last year, the 42.0 house price-to-earnings ratio gap between Kensington and Chelsea and Copeland is the biggest difference between these two local authority areas since data started in 1997.

The figures also show that, in general, newly built homes remain significantly less affordable than existing properties – and buyers can expect to stump up nearly 10 times average earnings for a newly built home.

A newly built property in 2018 typically equated to 9.6 times annual workplace-based earnings, the ONS said – while the price of an existing property was around 7.6 times average earnings.

The ONS said, on average, full-time workers can expect to pay an estimated 7.8 times their annual workplace-based earnings on buying a home.

Housing affordability across England and Wales remained static in 2018, it said, following five years of decreasing affordability.

The ONS said 77 local authorities have become less affordable over the past five years, mostly in London, the South East and the East of England.

There were no local authorities where affordability has improved over the past five years.

There are signs that housing affordability in London has improved over the past year – but this is against a backdrop of worsening affordability over the previous two decades, the report said.

Nigel Henretty, head of housing analysis at the ONS, said: “After five years of decreases, the estimated affordability of homes in England and Wales remained static in 2018.”

He continued: “It’s also notable that the estimates show newly built homes remained significantly less affordable than existing properties.”

Commenting on the figures, Andrew Montlake, director of mortgage broker Coreco, said: “Super prime London may have cooled but for average house prices to be 44.5 times average annual earnings underlines how alien it remains compared to the rest of the UK.”

He continued: “While getting a foot on the ladder in certain regions of the UK is eminently achievable, in others it is borderline impossible for a significant chunk of the population.

“It’s no surprise that we are seeing such a fundamental shift towards the private rented sector.”

Polly Neate, chief executive at Shelter, said more families “desperately need” the option of social housing.

She said: “Today’s figures leave us in no doubt that owning a home is an all-but-impossible dream for millions of working families.”