Home hunters have to spend nearly nine times their annual income to buy a home, new figures show.
The average house sold in England cost the equivalent of 8.7 times the average annual disposable household income.
Meanwhile, the multiples were lower in Wales and Scotland at six and 5.5 respectively, according to the latest figures from the Office for National Statistics.
The average home sold in England cost the equivalent of 8.7 times the average annual disposable household income, according to the ONS
This affordability ratio is below the peaks in Wales – that was in 2007 – and Scotland in 2008.
However, affordability ratios in England are now worse than at any time since measurements began in 1999.
It has prompted housing experts to describe affordability as “borderline fiction” for many people — and to say that owning a home is quickly turning into “fantasy.”
Andrew Montlake, of mortgage broker Coreco, said: “With depleted inventory levels and a chaotic lack of homes being built, affordability ratios were already groundbreaking for many.
“But with inflation and mortgage rates rising, affordability is quickly drifting into the fantasy world. Our real estate market is broken with no new houses being built and salaries not getting close to the pace of house prices. In many parts of the country, the British real estate market is starting to look like a science fiction novel.’
Joe Garner of property developer NewPlace adds: ‘Affordability has almost become an anachronism.
‘In the capital, the affordability crisis is more than extreme. An insatiable demand from an ever-growing population, coupled with a limited supply of housing and a slowing production line of new construction, will lead to a continued upward path in house prices.
‘Factor in low wage growth, rising rates and inflation and the outlook is getting darker.’
The ONS said there are big differences in the affordability of purchases across regions in Britain
The ONS said the figures were calculated in the year ending March 2021. Since then, property prices have continued to rise, while wage growth has failed to keep up with inflation.
Timothy Douglas, of the Propertymark industry association, said: “The sales market has remained vibrant so far in turbulent times, with homes selling extremely quickly. But with further potential rate hikes looming and the cost of living gripping many people’s finances, the latest data on housing affordability paints a worrying picture.
“With affordability ratios of household income and median house prices deteriorating to already worrying levels in 2021, we know that this imbalance will only worsen this year.”
He added that while home price growth could slow towards the end of 2022, the supply of homes to buy would not balance out with home buyer demand.
“Current pressures on availability in the market are a major factor in rising house prices, but this is expected to slow down towards the end of this year,” he said.
“However, this will not be enough to correct the supply and demand imbalance and current efforts simply will not deliver the right type of homes in the right places that we need locally to meet demand.”
There are large regional differences in the ONS data, with an average-priced home in the North East costing the equivalent of nearly 12 years of income for a low-income household, compared to 40 years in London.
The numbers are based on median incomes as both incomes and house prices are skewed with some extremely high values.
The ONS defines disposable income as the combined income, benefits, pensions and other income of a household, less the effect of direct taxes such as income tax, national insurance contributions and municipal taxes.
The median house price in England for the year to March last year was £275,000, while the median income was £31,800, giving a ratio of 8.7 years of income.
In Wales the average price was £176,000 and income was £29,400, while in Scotland they were £166,000 and £30,300 respectively.
The study revealed how incomes in 2021 were affected by the pandemic and are thus “more uncertain than unusual”.
Over time, the ONS said that house prices relative to earnings in England have risen since 2014 and are now past the 2008 peak. They have also nearly doubled since 1999.