Swathes of England and Wales becoming less affordable - claim

Almost a quarter of England and Wales will become less affordable to buyers by 2025, it’s been claimed.

The findings - from comparison service Uswitch - appear to contrast with data produced this week by the Halifax which suggested affordability was improving. 

Uswitch says the Office for National Statistics reported that 2021 saw a widening in the gap between average salary and house prices, with full-time employees spending around nine times their annual earnings on purchasing a home, up from eight times in 2020. 

However, 2023 data from Halifax has revealed that house prices have fallen at their fastest rate in 12 years, indicating that prices could become lower relative to income, though this is not guaranteed.

In order to determine which local authorities may not experience a decrease in the gap between salary and house prices, Uswitch predicted future affordability across England and Wales. Using historical median salary and average house price data to forecast the same figures for 2025, the predicted change since 2022 allowed Uswitch to forecast which local authorities will see a decrease in affordability.

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Houses in this local authority will become X% less affordable

Across the 329 local authorities analysed, the 2022 average median income is £33,101, while the average house price is £270,000. 

Some 76 local authorities are forecast to have less affordable homes by 2025, almost a quarter (of all of the areas analysed. 

In total, 484,000 residents of age are set to see homes become at least 10 per cent less affordable by 2025.

Three Rivers, a local authority in Hertfordshire, is expected to face the greatest decline in household affordability by 2025, at 21.5 per cent. The cost of houses in the area is expected to rise by just under a third from £560,000 to £731,973. However, residents’ median income is only forecast to undergo an eight per cent increase meaning that the increasing value of houses is far outpacing the average income in the area, making property less affordable.

Nine of Wales’ 22 local authorities are forecast to undergo a decline in household affordability by 2025. 

Uswitch mortgages expert Kellie Steed says: “In recent months, some lenders have cut the size of loans offered to some buyers by almost 20 per cent due to high mortgage interest rates impacting affordability. This is because a greater proportion of the repayment affordability is reserved for the interest element of a mortgage, meaning that on the same salary, the average person is not likely to be able to borrow as much as they could when rates were lower.

“That said, now is certainly a good time to start building your savings towards a deposit - as alongside interest rate rises, savings rates are at their highest in years.”