Over the past two years average house prices have increased by more than the average employee’s net earnings in almost one in five – 73 out of 384 – local authority districts (LADs) across the UK, according to the latest Halifax research.
The vast majority of these areas are in London, the South East, and East, representing 68 of the 73. The largest difference was in Hammersmith and Fulham, where house prices increased by an average of £199,930 over the last two years, exceeding average take-home earnings in the area by £143,232. Eight London boroughs appeared in the top ten.
Cotswold was the best performer outside London, the South East and East with house price gains exceeding earnings by £31,222. The Leicestershire areas of Melton and Harborough also saw average house prices increase by more than earnings in 2013 and 2014 with price gains in excess of earnings by £9,358 and £6,938 respectively.
Martin Ellis, housing economist at Halifax, said: “The housing market recovery over the past couple of years has resulted in some substantial prices rises in some areas of the country, particularly in London and the South East. This has resulted in homes increasing in value by more than total take-home earnings for the average homeowner in some areas of the country.
“This is good news for some homeowners. At the same time, it is challenging news for those looking to buy their first home in such areas, with prices being pushed out of range for many young people.”