House prices rocket as wages stall

The cost of buying a home in England has rocketed by more than three times the rate of the average salary in the space of a decade, a study has revealed.

The National Housing Federation said that in 2001 the typical price of a house was £121,769, while the average salary was £16,557.

But 10 years later the price of a home had increased to about £236,518, a 94 per cent rise, despite the sluggish state of the housing market in recent years.

Sign up to our daily newsletter

The i newsletter cut through the noise

Meanwhile, wages have risen by 29 per cent to £21,330 over the same period, making buying a home increasingly unaffordable, according to the federation, which represents housing associations.

The findings were released on the same day that a separate study from lettings network LSL Property Services said average rents reached a new high of £725 a month in July in England and Wales, amid “fierce competition” from frustrated would-be home buyers.

The housing federation study found that the area of Copeland in the Lake District has seen the fastest widening of the gap between house prices and wages over the decade, with house prices increasing by 145 per cent to reach £129,862 by 2011, while incomes rose by 5 per cent to reach £21,117.

House prices were 2.6 times average local annual earnings in Copeland in 2001 but by 2011 they were 6.1 times the typical wage.

In 2001 the ratio between the average house price and salary was 7.4 across England, but by 2011 that had risen to 11.1, the study said.