Although earnings growth has been outpacing house prices since 2023, Londoners would have to earn almost twice the average full-time income to buy an average home in the capital, according to the latest e.surv house price index.
The data shows that the gap between average incomes and average house prices remains large across the south-east of England, the east of England and the south-west.
Scotland and the North East are the only regions where the average full-time income exceeds the income needed to buy an average house.
The index reveals that average house prices across Great Britain reached £333,000 in the year to October, an increase of 1.9% year-on-year.
However, prices remained flat during the month and fell by 0.1% during the quarter.
Regional differences remain evident, with Scotland continuing to record the strongest annual growth in Great Britain at 3.5%, followed by the North West at 3.3% and Yorkshire and the Humber at 3.2%.
House price growth remained above 2% across Wales, the West Midlands, East Midlands and the North East.
The momentum is much weaker in the south, where annual growth slowed to 1.8% in the southwest, 1.1% in the east, and 0.7% in the southeast.
London remained the only area where prices fell, with the average house price falling by 1.3% year-on-year and 1.0% over the quarter to £598,700.
“The past three years have brought some improvement in affordability, with strong earnings growth narrowing the gap between income and house prices in every region,” says Rob Owens, head of research at e.surv. “But high mortgage rates continue to impact affordability, limiting the extent of this improvement.”
“London makes this abundantly clear. Even after the recent decline in house prices and strong growth in earnings, the income required to purchase an average property remains roughly double the average full-time income.”
“The result is a very regional market. Scotland and the north-east are better aligned with local profits, while London and much of southern England still face a significant affordability gap.”
“At the same time, the autumn budget provided targeted support rather than broad stimulus. Taken together, its measures are unlikely to transform the housing market in the near term.”
