And the biggest gulf between rising house prices and take-home pay is in Three Rivers, Hertfordshire.
What's the latest?
House prices in the UK are rising so fast that a QUARTER of properties ‘earned’ more than their owners over the past two years.
The number of local areas where house prices have outpaced average take-home pay has soared significantly over the past year, from 19% to 28%.
According to Halifax, the overwhelming majority of these neighbourhoods – 90% – are in London, the south east and the east of England.
Why is it happening?
The housing market is plagued by a chronic shortage of homes, with the number for sale falling to a new record low last November, according to RICS. However, buyer demand remains strong.
This mismatch has led to house prices increasing substantially in some areas of the country, particularly in London, the south east and the east of England.
Who does it affect?
Martin Ellis, housing economist at Halifax, said: “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.”
Sounds interesting. What's the background?
The biggest gulf between rising property values and earnings was found in Three Rivers, Hertfordshire. House prices in the area increased by an average of £148k over the last two years, exceeding the average post-tax earnings in the area by a staggering £98k.
"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.”
London dominated the top 10 ranking, with homes in no less than seven boroughs ‘earning’ more than their owners during 2014 and 2015.
Warwick in the West Midlands and South Northamptonshire in the East Midlands were the top performers outside southern England over the past two years. House prices in the two areas outshone earnings by £25k and £15k respectively.
And over the past five years, 9% of local areas has seen house prices rise by more than earnings.
The biggest house price-to-earnings gap in London was found in Hammersmith & Fulham, where typical property values increased by £249k, surpassing take-home pay between 2011 and 2015 by £109k.
Top 3 takeaways
- One in four homes 'earned' more than their owners over the last two years.
- The number of local areas where house prices have outpaced earnings has increased significantly over the past 12 months.
- The biggest gap between rising property values and earnings was in Three Rivers, Hertfordshire, where homes 'earned' almost £100k more than their owners.
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