There is more bad news for struggling first-time buyers looking to get on the property ladder – homes now cost 7.6 times the average income.
According to figures from the Office for National Statistics, house prices in England and Wales have gone up by 259% since 1997, while annual earnings increased by 68% over the same time period.
This means that the average person now pays 7.6 times their annual earnings on purchasing a home, up from 3.6 times earnings in 1997.
Unsurprisingly, housing affordability has worsened fastest in London boroughs over the last two decades.
Kensington and Chelsea was the least affordable area, with house prices 38.5 times greater than annual earnings.
The most affordable local authority in 2016 was Copeland, with house prices being on average 2.8 times greater than annual earnings.
Roger Harding, Shelter’s director of communications, policy and campaigns, said: “Today’s figures are another nail in the coffin for the current system of housebuilding, which has failed an entire generation.
“In the last two decades, house prices have been growing nearly four times faster than average wages, because our broken system of building homes benefits land traders and developers rather than families. A major reason for this is the eye-watering cost of land, which means developers build fewer affordable homes in order to make their money back.”
Andy Sommerville, director at Search Acumen, said: “Evidently, the 21st century has seen home-ownership pushed far into the distance for many young professionals but we are now in danger of Generation Rent encompassing house hunters of all ages.
“The huge gap between earnings and affordability is extremely worrying. Prospective buyers are more stretched to buy property in every single local authority than they were before the turn of the millennium. It is not simply the fault of wages, it is down to the gaping hole between demand and supply in our property market.
“Various policy announcements over the past months have given some reassurance that this is on the government’s agenda, however Philip Hammond’s radio silence when it came to housing in the latest Budget led to some criticism from the industry. It is now up to the construction industry and the mortgage lenders to kick-start the recovery of our problematic sector and pave the way for a healthier and sustainable housing market.”
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