House prices have increased by more than the average employees net earnings in more than a quarter of local authority areas over the past two years, new figures show.
Findings from Halifax show the number of areas where house prices are outpacing earnings over the last two years has increased from 73 out of 384 (19%) a year ago to 108 out of 380 (28%).
Most of these areas are in the London, the South East and East of England, accounting for 97 of the 108 areas.
The biggest gap between rising property values and earnings was in Three Rivers in Hertfordshire, where house prices increased by an average of £147,990 over the last two years, exceeding average earnings in the area by £97,992. Seven London boroughs appear in the top 10 districts.
Outside of southern England, Warwick and South Northamptonshire were the highest performers, with house price gains in excess of earnings of £24,723 and £14,837 respectively.
Martin Ellis, housing economist at Halifax, said: “The housing market recovery over the last few years has led to substantial price rises in some areas of the country, particularly in London, the south east and the east of England. This has resulted in homes increasing in value by more than total take-home earnings for the average homeowner in many areas of the country.
“Clearly, this is good news for some homeowners. However, it does make conditions tougher for those looking to buy their first home in such areas, with prices being pushed increasingly out of range for many young people.”
According to Halifax, the average cost of a house or flat in the UK has gone up 9.7% over the past year to £212,430. The average UK salary is £26,500.
A recent report from Santander suggests that incomes will not keep pace with the rise in property prices, resulting in an overall decline in affordability. At present in the UK, the average property price is around eight times the average income, but by 2030 this is expected to hit a multiple of 9.7.
