In England and Wales in 2017, buying an existing house was ‘significantly’ more affordable than newly built homes, according to data from the Office for National Statistics (ONS).

House prices of existing homes averaged at 7.6 times more than earnings, compared with newly built dwellings, which were less affordable than existing dwellings in every year since 1997 apart from 2009 and 2010 (around the time of the economic downturn).

Last year, those working full-time could, said the ONS, typically expect to spend 9.7 times their median gross annual earning on purchasing a newly built property, and 7.6 times their annual earning on an existing property.

The ONS noted that the affordability of new-build homes has worsened at a quicker rate than existing properties since 2011.

Full-time workers paid around 7.8 times their annual workplace-based earnings on a home purchased in England and Wales in 2017 – an increase of 2.4 per cent since 2016.

Overall, workplace-based affordability “significantly worsened” in England between 2016 and 2017. Wales recorded no significant change.

The most affordable local authority in 2017 was Copeland, in the north-west of England, when both workplace-based and residence-based earning were considered.

House prices in Copeland were 3.0 times residence-based earnings in 2017, therefore, it was more affordable to buy a property in Copeland if you worked there but lived elsewhere, in comparison with those who live in Copeland, but may not work there. The ONS added that while it was the most affordable local authority, house prices there are not necessarily the lowest or earnings the highest.

In comparison, house prices in Kensington and Chelsea were 28.9 times residence-based earnings, while the median house price in 2017 was £1.3 million.

Between 2012 and 2017 in England and Wales, 69 local authorities had “significant differences” in the ratio of median house prices to median workplace-based annual earnings over five years. More than three-quarters of these local authorities were in London, the South East and East of England.

According to the ONS, of the 10 least affordable local authorities, seven were in London. All but five London boroughs had significant worsening of affordability since 2012.

The full data set can be found on the Office for National Statistics website.

* The ONS explained that workplace-based earnings refer to the earnings recorded for the area in which the employee works, whereas the residence-based earnings refer to the area in which the employee lives.

Source: Laura Edgar, The Planner [online], 27 April 2018

Local Comment: 19th century terraced houses, such as those that predominate in the Birkenhead & Tranmere Neighbourhood Area (about 70% of total housing stock) remain very popular, especially with first time buyers, because of their affordability.  As with any residential property, regular maintenance and careful management of tenant behaviour is the key to making a terraced street an attractive and sustainable place to live. – Philip Barton