Pay catching up with house prices
People’s pay has started to catch up with property prices in the UK with wage growth rising faster than house prices over the past 10 years in some regions. Around 54% of areas, including Birmingham and Edinburgh, have seen pay outpace property prices, yet some regions including London and much of the South have seen the disparity increase.
Chief economist of the Yorkshire Building Society, Andrew McPhillips, said: “…the north of England, Wales and Scotland present a different picture entirely, with many places more affordable than they were before the credit crunch.
“While some northern cities, such as Manchester, are less affordable than they were in 2007, in much of the north of England, Scotland and Wales, the gap between earnings and house prices is around a third of the average for London.”
Whilst the disparity between pay and house prices has been a struggle on first time buyers in particular, millions of potential home owners have taken advantage of Help to Buy ISA’s to start saving towards their first deposit.
Marked differences across Great Britain
As well as marked differences on wage/property prices across different regions, there’s also big differences in trends across England, Scotland and Wales. In Wales, the ratio has fallen from 6.9 times earnings to 5.7 with a similar story in Scotland where wages rose faster and the current house price around five times the average salary.
In England, however, house prices rose faster than wages, costing around 8.2 times the median average pre-tax earnings for a single full-time employee.
House price boom in the East Midlands
Perhaps the most surprising property news of the past month is that housing costs are rising faster in the East Midlands than anywhere else in the UK right now.
For sale prices increased 7.5% over the last year, whilst rental demands also increased 2.8% according to the Office for National Statistics.