Housing market becoming more affordable for buyers as wages rise
The housing market is becoming proportionally more affordable for buyers as wage growth and employment rates rise.
Average weekly wages rose to £495 – up 3.3% in the three months to October – standing at the highest level for seven years.
Meanwhile, the number of people in work reached a record high, rising by 79,000 to 32.48 million.
The data, released by the Office for National Statistics, highlights a strong job market and continued wage growth for workers.
Analytics Capital Economics said of that figures that: “The latest labour market figures suggest that a recovery in real pay growth is taking root. This supports our view that GDP growth will rebound next year if a ‘no-deal’ Brexit is avoided.
“Admittedly, there have been false dawns in the past few years. But we think that the recent recovery in real earnings growth will probably be sustained.”
The data also highlights that, despite strong growth in the UK property market, properties are becoming proportionally more affordable in a number of towns and cities.
Wage growth increasing faster than property prices
The increase in average wages of 3.3% over the three months to October means that in proportional terms, the property market has become more affordable for buyers – despite property prices increasing in 17 out of the 20 largest UK cities.
In the last three months, just Edinburgh has seen house prices rise faster than wages at 3.6%, with every other major city seeing growth below wage inflation.
Areas such as Bristol which saw zero growth and Bournemouth, Aberdeen and Cambridge which saw negative growth will have seen affordability and budgets become even more affordable, albeit from an expensive starting position compared to other areas.
In great Northern markets such as Liverpool, Leeds and Manchester, house prices have continued to grow from August to October at 3%, 1.7% and 1.4% respectively, indicating that whilst homeowners and investors can see larger returns on their properties, the number of potential buyers will likely increase as affordability increases.