Number of homes ‘earning more than their owners’ falls

23 April 2019

  • Fewer than one in 10 (8%) local areas have seen average house prices increase by more than total average pay over the last two years
  • Homeowners in Richmond-upon-Thames ‘earned’ £55,483 more from their home than at work over two years (£2,312 per month)
  • This is more than 80% of the average UK house purchase deposit (£68,946)

The gulf between earnings and property price inflation has shrunk considerably across the UK in recent years, according to new research by Halifax.

Historically, homeowners in many locations found themselves ‘earning’ more from the annual increase in the value of their property than from their take-home pay. That trend is now shifting as a result of weaker house price inflation and stronger wage growth.

The average rise in house prices over the last two years has outstripped post-tax earnings in fewer than one in 10 (8%) local authority districts (LADs). This compares to almost one in five (18%) in 2017 and nearly a third (31%) in 2016.

Leafy London borough Richmond-upon-Thames is one of those few, producing the biggest gap between property inflation and wages at £55,482, or the equivalent of £2,312 a month. This equates to more than 80% of the average deposit on UK house purchases, but still far short of the London average of £137,638.

The next biggest gap was found in Winchester, home to much of the South Downs National Park, in the South East of England (£45,016). Wandsworth was the only other London borough to make the top 10, in stark contrast to a year ago, when nine of the top 10 LADs were in the capital.

Russell Galley, Managing Director, Halifax, said: “While the slowdown in house price growth may not be welcomed by homeowners, the narrowing gap between prices and wages should improve mortgage affordability for all, meaning that larger house, home extension or even first property are all more attainable.

“Although every region of the UK saw earnings exceed price growth overall, there continue to be significant variations across the country. The majority of areas where house price inflation outpaced owners’ take-home pay are still to be found in London and the South East.”

Regional picture

Despite 28 individual local authorities recording average house price increases in excess of total average pay over the last two years, at a regional level, the picture was more consistent.

All 12 regions of the UK saw average earnings exceed house price inflation, from £19,649 in London up to £35,250 in Scotland.

Long-term view

When looking over the last five years, London was the only region to see average house prices increase by more than total average pay (£23,817).

Over the same period, the LAD with the biggest margin was Three Rivers in East of England (£88,281).