(Reuters) – House prices in England grew increasingly unaffordable in 2023 with an even worse picture in London, according to figures published on Monday that underlined the scale of Britain’s housing crisis.
The average house price was equivalent to 8.6 years’ worth of household income, at 298,000 pounds ($380,337.40), up from 8.4 years in 2022, the Office for National Statistics said.
The ratio hit a record high of 8.8 in 2021, when house prices surged during the COVID-19 pandemic as many people sought larger homes.
Only the top 10% high income households in England could buy an average-priced home house in 2023 with fewer than five years’ worth of household income – the ONS definition of affordability.
In Wales, the top 30% and in Scotland the top 40% of households by income could afford an average-priced home. Northern Ireland was the only part of the UK where the average-priced home was affordable to the average household for income, based on the ONS definition.
Housing inequality in Britain is a hot political topic. Prime Minister Keir Starmer last week said “brave” action was needed to hit a target of building 1.5 million new houses in England over five years.
The ONS data showed houses in London were especially unaffordable.
“In London, the average home was not affordable for any household income decile,” the ONS said.
A Reuters poll of housing market analysts last month showed British house price increases will outpace overall inflation, although affordability for first-time homebuyers will improve – with interest rates set to fall further in 2025.
Economists surveyed by Reuters last week expected the BoE to cut rates to 3.75% by the end of next year, while they predicted house prices would rise by 3.1% next year and 4% in 2026.
The average London house price in 2023 was equivalent to nearly 35 years of income for the bottom 10% of households.
Last month, mortgage lender Halifax said housing affordability improved slightly in 2024, using a different metric centred on average wages.
The ONS said houses in England were most affordable in the north east followed by Yorkshire and the Humber.
($1 = 0.7835 pounds)
(Reporting by Andy Bruce; Editing by William Schomberg)
