Fresh data from money.co.uk mortgages display how the average house price compares to the average salary across various regions in England and analysed factors such as average house prices and average salaries across the UK.
According to the study, the mean salary in the UK in 2021 was £31,285. The average UK house price as of June 2022 was £286,000. The UK demonstrates a mean salary to average house price ratio of 1:9.1.
Within the regions of England, the North East shows the closest equality between mean salary and average house price with a ratio of 1:5.9 (salary : house price).
London is the UK region that demonstrates the lowest equality between mean salary in the capital and average house price, with a ratio of 1:14.3 (salary : house price).
|
Region |
Median Salary UK over 2021 |
Average house price June 2022 |
Simplified Ratio |
|
North East |
£27,515 |
£157,924 |
1:5.9 |
|
Yorkshire and The Humber |
£28,808 |
£203,973 |
1:7.1 |
|
North West |
£29,529 |
£212,347 |
1:7.1 |
|
East Midlands |
£28,416 |
£245,911 |
1:8.3 |
|
West Midlands |
£30,000 |
£246,114 |
1:8.3 |
|
South West |
£29,080 |
£322,329 |
1:11.1 |
|
East |
£30,867 |
£390,513 |
1:12.5 |
|
South East |
£32,672 |
£390,513 |
1:12.5 |
|
London |
£39,716 |
£537,920 |
1:14.3 |
|
United Kingdom |
£31,285 |
£286,000 |
1:9.1 |
Claire Flynn, money.co.uk mortgages expert, commented: “For buyers who want to purchase now, a key consideration is negative equity. Negative equity is when your home is worth less than what you owe your mortgage lender, making remortgaging or selling very difficult. If house prices do fall, there’s a risk of this, particularly for those who buy with a small deposit.
“If you are in the position to purchase your first property or move up the property ladder, putting down a larger deposit can help ease the risk of negative equity, and it also helps bring your mortgage rate down.
“The best mortgage rates are usually reserved for buyers who put down 40% or more of the purchase price, but even a 25% deposit can get you access to better deals than a smaller deposit.
“Ultimately, whether it’s the right time for you to buy or sell depends on your individual circumstances. If you’re ready to purchase a property, make sure to do the numbers and check you can afford the mortgage and other associated costs. If you plan to own the property for a significant amount of time, this could also help you weather any short-term market turbulence.”
As both salaries and income data are likely to both be skewed, median data for house prices should have been shown as well as median data for salaries. Even so, this demonstrates that Mr or Ms Median salary with a 10% deposit and a mortgage at four times salary pretty much won’t be able to buy a house on their own except maybe in the North East. Assuming that you can get a mortgage for four times a joint income that would make a 1:8 ratio workable and a couple should be able to afford to buy in the North East, Yorkshire and The Humber, North West, East Midlands and West Midlands but the South West, East, South East and London would be out of reach. Up the deposit to 30% and the South West becomes achievable. Up the deposit to an eye watering 40% and our couple could buy in any area with the possible exception of London but it would be a pretty rare couple who can save up a deposit in excess of £160,000 especially while also paying rent. So these people would be doomed to a lifetime of renting. Rental demand and rents levels will also track these figures with least demand and lowest rents in the North East and highest demand and highest rents in London and the South East. The median salary data shows that there is not much difference in median earnings levels across the country. So, if you can actually find a job (there’s the rub) or your job is a “portable” one like nursing or teaching with national pay scales, relocate to a cheaper area to buy. Of course, if levelling up really did work and there were loads of jobs available cheaper areas would not be cheap for long.
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