House price growth in the UK is outstripping salaries in one in five areas and showing a regional divide. See if your area is in the top 10.

Properties have 'earned' more than their owners in one in five areas of the UK in the past two years.

Barnet in London recorded the biggest gap between house price rises and average local pay at £52,256 or £2,177 per month.

It was followed by North Hertfordshire at £40,903, the only place outside London and the south east to make it into the top 10, according to Halifax.

But the number of places where house price growth outstripped average earnings has dropped from 31% in 2016 to 18% in 2017 as the property market slows.

Russell Galley, managing director at Halifax, said: “Over the past two years, we have seen house price growth and earnings converge at a national level, leading to a drop in the total number of areas where the average house price rise is greater than owners’ take-home earnings.”

House prices v earnings Top 10 over last two years

Local Authority Region 2 Year Change In House Prices*£ Net Median Earnings 2 Year (2016- 2017)** £ 2 Year £ Difference in House Prices v Earnings
Barnet London 106,896 54,641  52,256
North Hertfordshire East of England 95,417 54,514 40,903
Newham London  75,304 45, 169 30,135
Worthing South East  73,342 43,472 29,871
Canterbury South East 75,798 47,454 28,345
Croydon London 79,064 51,678 27,386
Guildford South East 77,664 54,992 22,672
Oxford South East  71,275 48,761 22,513
Fareham South East 67,799 47,571 20,228
Merton London 73,800 53,784 20,016

Why is this happening?

Despite the recent slowdown, house price growth has been strong in many regions of the UK during the past two years, due to the mismatch between supply and demand putting upward pressure on property values.

By contrast, wage growth has struggled to keep pace with inflation.

The net result is that while many homeowners have faced stagnant wage growth, the value of their property has increased significantly.

Who does it affect?

Although owning a home that earns more than you do may sound like great news, it really only benefits those who have made their last move on the property ladder.

For people who still want to trade up, it simply means their next purchase will be even more expensive.

The situation is particularly bad news for first-time buyers saving to put together a deposit.

Mortgage lenders base the amount they will advance on multiples of earnings, so having property price rises that outstrip local pay worsens already stretched affordability.

The value of many properties in London is rising by more than their owners earn annually  

What’s the background?

There is a continuing north/south divide in affordability, with 61 of the 71 areas where house price growth has been greater than average earnings located in London, the south east, south west and the east of England.

The top performing place outside of southern England was Harborough in the East Midlands, where property values increased by nearly £20,000 more than local people earned in the past two years.

But in the north east, Yorkshire and the Humber, Scotland and Northern Ireland average earnings outperformed house price rises.

People in East Renfrewshire in Scotland were paid an average of £18,209 more than their property increased in value, while those in Belfast in Northern Ireland brought home £17,885 more.

Has your home increased in value more than you earned last year? Find out how much your home is worth today here.

Top 3 takeaways

  • Properties have earned more than their owners in one in five areas of the UK in the past two years

  • Barnet in London recorded the biggest gap between house price rises and average local pay at £52,256

  • The number of places where house price growth outstripped average earnings has dropped from 31% in 2016 to 18% in 2017

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