Housing affordability falls to its lowest since 1999

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The affordability of a home in England has fallen to its lowest since records began in 1999, official figures show.

The cost a typical home in England has risen to 8.7 times the average annual disposable household income in the year to March, according to data from the Office for National Statistics.

The figure compares with affordability ratios of 6 times average disposable income in Wales and 5.5 times in Scotland, both of which are below peaks hit around the time of the financial crisis.

The ONS calculates the ratio using median prices because the distributions of both income and house prices are skewed, with some extreme high values. The median house price in England was £275,000 and median income £31,800. In Wales it was £176,000 and £29,400; in Scotland it was £166,000 and £30,300.

House prices have risen strongly since the end of the first lockdown as people looked for homes with more space, helped by a stamp duty holiday. They have kept rising since the end of the tax break, at the end of September last year, bolstered by a shortage of homes for sale and high demand.

Marc von Grundherr, director of Benham and Reeves, the estate agent, said: “Climbing the ladder is an incredibly tough task in today’s market, where only those with the financial collateral of an existing property can comfortably negotiate the cost of a purchase.

“It’s no wonder that we’re seeing a move towards long-term renting as a lifestyle choice, not just a necessity.”

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