New government data has revealed that housing in the UK was more affordable in 2019 than in the previous year. According to alternative property lender Quinshaw Finance, this was in part due to the increase in the National Minimum Wage implemented by the government, as well as rises in public sector pay.
First Improvement In Affordability Since 2015
Figures provided by the Office for National Statistics (ONS) showed that property purchasers in the UK needed to spend an average of 7.8 times their annual salary to buy homes last year. This was down by 0.2 compared with 2018.
Although average house prices rose by £750, this was more than offset by the increase in medium gross earnings. The average salary in the UK climbed from £29,667 to £30,500 between 2018 and 2019.
Quinshaw Finance head analyst Greg Davies suggested that the government’s decision to increase the minimum wage last April for those aged 25 and above from £7.83 to £8.21 an hour was one of the factors that helped to make properties more affordable. There was also an above inflation pay increase for nearly a million public sector workers in 2019, including doctors, soldiers and teachers.
Mr Davies went on to say that Quinshaw Finance is “pleased to see” that homes became more affordable to many people in the UK last year, adding it is important that property continues to remain accessible.
Most And Least Affordable Areas Revealed
The Quinshaw Finance reviews of the ONS data also highlighted the most and least affordable areas to buy property across the country. There continues to be significant regional variation in house prices, with some areas significantly more expensive than others.
London dominated the list of the top 10 least affordable places to buy, with homes in Kensington and Chelsea costing 38.33 times the average annual salary. In second place was Westminster, where homes were selling for 20.66 times the average salary. This was followed by Richmond Upon Thames, where buyers could expect to pay 18.44 times their yearly earnings.
At the other end of the spectrum, Copeland in Cumbria was identified as the most affordable place to buy, with properties in the borough costing 2.67 times the average annual salary. This was followed by Blaenau Gwent in Wales and Barrow-in-Furness in Cumbria, where prices were 3.17 times and 3.44 times the average salary respectively.
A Note Of Caution
Mr Davies suggested that the affordability figures were a “cause for great confidence” in the country’s property market, but sounding a note of caution, he added that Quinshaw Finance hopes the market will remain stable in the unfolding coronavirus pandemic and with a potential no deal Brexit on the horizon later this year.