HOUSE PRICES VS. INCOME

THE UK EDITION

Buying a house doesn’t come cheap. In fact, it can be incredibly costly to get yourself on the property ladder. If you’re thinking of taking the plunge into the property market, you may be wondering where you could most easily afford to buy a house.

We’ve been crunching the numbers, looking at average house prices and median salaries by area, to find out which parts of the country offer the most and least affordable housing. Where does your city rank?

Methodology

House prices vs. income

KEY

  • Rank

  • Town/City

  • Region

  • Average House Price (Feb 2019)

  • Median Salary

  • House Price as % of Salary

  • House Price to Income Ratio

Ratio by region

When looking at each city, we were able to divide them into their regions so we could find out which parts of the country offered the most and least affordable housing in the UK. We were able to work out an income to house price ratio with the data, then took an average of these for each region. This showed that the North East offers the most affordable housing with house prices a little over 6 times the median salary. London sits at the other end of the table with house prices over 15 times the median salary in the region.

1 North East x 6.11
2 North West x 6.77
3 Scotland x 6.81
4 Yorkshire and the Humber x 7.27
5 East Midlands x 7.76
6 Wales x 7.85
7 West Midlands x 8
8 South West x 10.85
9 East x 11.45
10 South East x 11.87
11 London x 15.34
7 West Midlands x 8
8 South West x 10.85
9 East x 11.45
10 South East x 11.87
11 London x 15.34
     

North/South Divide

Looking at the results, it’s not hard to see a real divide between the North and South of the country. In fact, when we take an average of each Northern region (North East, North West, and Yorkshire & The Humber), we get a house price to income ratio of 6.72. When we do the same for the Southern regions (South East, South West, East England, and London) we get nearly double, with a house price to income ratio of 12.38.

While the average of the median salaries of Southerners (£26,056) is a little higher than those of Northerners (£21,356), the average house prices are dramatically steeper, with Northern houses costing an average of £144,356 and Southern homes costing a whopping £328,444.

Methodology

We chose cities that have a minimum population of 100,000. Due to lack of data, we excluded Belfast, Gillingham, Sale, and Sutton Coldfield.

All house prices were taken from the UK Land Registry - http://landregistry.data.gov.uk/app/ukhpi using the 2019 data.

To find the median salary by city, we used ONS data from 2018 which can be found here (Table 8.7a Annual Pay - Gross 2018) - https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/datasets/placeofresidencebylocalauthorityashetable8.

We then worked out how much the house price is worth in relation to the median salary in each area, giving us a ratio of house price to income, discovering which places offer the most affordable housing.

Brought to you by Compare the Market, the home insurance experts