Housing is now more affordable than it was a year ago, according to the UK’s biggest mortgage lender Halifax. The lender cited falling house prices and increased wages, reporting that a typical home now only costs 6.7 times the average income, compared to a record 7.3 times last year.
Halifax’s report measured typical house prices across the UK, comparing the data with average incomes. While house prices have fallen in the past year, the average wage in the UK has increased by around 7% over the same period. At its peak in June 2022, the average house cost £293,586, with an average full-time salary of £40,196 a year. The gap closed 12 months on: Halifax reported the average house cost £286,276, and the average full-time wage has increased to £43,090.
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However, these figures alone don’t paint the entire picture of the housing market or the costs households are facing. Although house prices are falling, mortgage rates and the cost of living are still on the increase, which is still blocking some households from getting on the housing ladder.
“The sharp rise seen in interest rates over the last year has meant the sums now look very different for both homebuyers and those looking to remortgage,” said Kim Kinnaird, mortgages director at Halifax. “Typical monthly mortgage payments are up by around a fifth, which is a big jump at any time, but particularly during a wider cost of living squeeze.”
“We don’t yet know what the ‘new normal’ looks like for mortgage rates and house prices over the longer-term. But we expect the market to rebalance as both buyers and sellers adjust their expectations to reflect higher costs and lower demand. It’s likely the gap between average earnings and property prices will narrow over time, which will be welcome news to first-time buyers in particular, especially in areas which could offer better value for money.”