Housing affordability has emerged as a focal point in the wake of the latest report released by the Office for National Statistics (ONS), which casts a revealing light on the current state of the housing market across England and Wales. The report indicates that while housing affordability has improved in many local authorities, significant disparities remain, especially in highly sought-after areas.
According to the ONS, in 2024, the median home price in England was approximately £290,000, with an associated affordability ratio of 7.7 times the average full-time employee earnings, which stands at £37,600. This marks a notable improvement from the 2023 figures, which recorded a house price-to-earnings ratio of 8.4. Similarly, in Wales, the average house was priced at £201,000, corresponding to 5.9 times the average annual earnings of £34,300. The figures represent a recovery from the post-COVID-19 struggles many faced in the housing market.
The latest data elucidates a broader trend: between 2021 and 2024, average earnings rose significantly by 20%, further lifting the affordability index slightly higher across the spectrum of local authorities. The report articulates that only 9% of local authorities had homes that could be purchased for less than five times workers' earnings in 2024, an improvement from 6% in the previous year and marking the most substantial proportion since 2015.
Despite these upbeat statistics, disparities abound, as Kensington and Chelsea remains the least affordable area for homebuyers for the 26th consecutive year. In 2024, the average property price soared to £1.2 million in this affluent enclave while typical salaries hovered around £44,300, resulting in a staggering affordability ratio of 27.09. Comparatively, in Blaenau Gwent, the most affordable local authority, homes sold for an average of £130,000, leading to a ratio of 3.75.
Analysis indicates that between 2019 and 2024, several local authorities in London also exhibited impressive increases in affordability, particularly Tower Hamlets, where the ratio dropped from 8.4 to 7.3—its lowest level since 2013. That said, the median price of a home in Tower Hamlets still remains at an eye-watering £470,000, a stark contrast to the national average.
Sarah Coles, head of personal finance at Hargreaves Lansdown, emphasized: "Wages have risen faster than house prices in recent years, so would-be buyers are inching slightly closer to being able to afford a home of their own." However, she continues to point out that the average home still costs 7.7 times the average income, making homeownership a stretch for many, especially amid persistently high interest rates. "Housing is considered affordable when it costs five times earnings, and still fewer than one in 10 areas have reached this level," Coles remarked, reinforcing the ongoing challenges faced by many would-be buyers.
The report reveals some troubling trends as well. Particularly striking is the worsening affordability in the Staffordshire Moorlands area, where the affordability ratio ballooned from 5.8 in 2019 to 7.3 in 2024. This signifies a systemic issue affecting various regions that desperately need attention as housing policies evolve.
The recovery in affordability represents a glimmer of hope, with 91% of local authorities noted as having improved affordability since 2023, while only 9% worsened. However, the returns have not been seen across the board uniformly. Significant segments of the population continue to struggle under the yoke of increasing living costs and house prices. It remains perilous for first-time buyers to navigate through the labyrinth of high prices and rising interest rates, while existing homeowners grapple with their financial commitments amidst fluctuating mortgage rates.
In tandem with the rising value of homes, the overall economic sentiment surrounding housing continues to foster debates regarding the future of the housing market. Rising interest rates further complicate matters, as potential buyers are increasingly cautious about the financial commitments they take on. Furthermore, recent policy changes regarding stamp duty are expected to hinder affordability for some, especially first-time buyers, as more stringent regulations come into effect starting in April 2025.
Notably, while certain local authorities report enhancing their housing affordability, the overarching narrative reveals a market still reeling from structural inequalities. With just 9% of areas meeting the definition of 'affordable'—that of costing five times or less than earnings—the challenge persists for many across the UK.
As the sector navigates these complex challenges, stakeholders are urged to consider how best to facilitate genuine improvements in accessibility within the housing market. The government and relevant agencies must remain attentive to emerging trends while also re-evaluating housing policies to meet the diverse needs of current and future homeowners.
In conclusion, while improvements in housing affordability statistics provide a welcome respite, they simultaneously underscore the disparity that persists in certain areas, warranting ongoing scrutiny and proactive policy recommendations to ensure that the fundamental right to a home remains viable for all.
