10 locations with the smallest disparity, and therefore where wage growth is keeping relative pace with house prices, were East Devon at 8.56%
Data from 2022 to 2023 compares how income growth and house price increases have aligned over the past 20 years in Local Authorities across the UK.
Researchers at Bird & Co have explored recently released ONS data to present a detailed overview of how these two factors compare over time to ascertain a measure of housing affordability. Examining ONS property sale figures alongside this, the statistics reveal how income and house prices have impacted house sales, if at all.
This graph shows the percentage change in property sales, house prices and annual income year on year, over the past 20 years.
Since 2009, the largest disparity between house price percentage change and income percentage change can be seen in 2021-22 as a result of a drop in employment during the pandemic and an increased demand for houses.
This larger disparity could also be due to the government introducing a Stamp Duty holiday in July 2020, which temporarily increased the tax threshold for residential properties, effectively reducing the tax burden for buyers and stimulating market activity.
Since then, we can see a small rise in income and a fall in house prices, suggesting better affordability for housing in Mid Devon. Yet, property sales have plummeted since 2022, suggesting that even with steady house prices and income, there are other factors preventing homeownership, such as a lack of availability in Mid Devon.
To get a sense of affordability across all locations in the UK, Bird & Co worked out the percentage change in house prices from September 2003 to September 2023, and the same for income from March 2003 to March 2023, and found the difference between these figures. From this, the areas with the largest and smallest disparity between house price and income growth became apparent.
The results show a variety of locations across England and Wales that appear to have higher affordability.
Daniel Chard, Partner at Bird & Co, said: “The findings reveal Mid Devon as one of the least affordable places to buy a home in the UK, which is encouraging news news for prospective buyers in the region.
“This study should inspire those looking to buy a home to consider the long-term relationship between income and house prices to better understand affordability.
“However, it’s evident that factors beyond affordability are holding people back from becoming homeowners. Even when house prices and incomes align closely, property sales remain somewhat unaffected.
“This could indicate a lack of suitable housing availability, property value fluctuations, current interest rates, and mortgage availability.
“Personal circumstances, such as job security and long-term financial planning, also play a significant role. We urge anyone looking to buy a home to consider these long-term factors to ensure a better quality of life after purchasing a home.”