How much was your latest pay rise? Chances are, it was less than the value increase of your home over the past 12 months, says Zoopla research.

What’s the latest?

Property values in Britain outpaced average wage increases by 1.13% in the past year, according to the latest Zoopla research.

Average home values across the country increased by 0.53% in the 12 months to June, while national average incomes moved by -0.6%.

Zoopla compared its own property data across 55 of Britain’s biggest towns and cities with annual salary figures from job website Adzuna, to access the average ‘salary growth-to-property-price growth’ ratio.

Using this ratio, Luton emerged as the least affordable of the 55 locations.

The large Bedfordshire town saw average local salaries fall by 2.94% to £32,067 during the last 12 months, while its property prices jumped 5.06% to £259,715.

This puts the salary-to-property price growth ratio down at -7.99%.

Stevenage and High Wycombe, where growth in the value of homes outpaced salary rises by -6.41% and -5.43% respectively, emerged as the next least affordable places to live during the last year.

Conversely, Sunderland and Chelmsford were the most affordable locations. Sunderland saw salary increases outdo property price growth by a ratio of 7.81%, while Chelmsford rung in second at 7.68%.

Modern flat in Luton

Above: A modern one-bedroom flat in Luton, close to the town centre, available for £190,000

Why is this happening?

While the latest evidence suggests that growth in Britain’s housing market is continuing to cool, national property values have not dropped in real terms. And, in many cases, homeowners will wait longer for a pay rise at work than for an increase in the value of their home.

However, as Zoopla’s research shows, this is not always the case.

Britain is also littered with property ‘micro markets’. In some areas, house prices are static or, as is currently the case in Aberdeen, falling.

You can find the current estimated value of your home by typing in your address here.

Who does it affect?

Zoopla also looked at a snapshot of the disparity between average earnings and property prices across Britain.

Unsurprisingly, the highest property price-to-salary ratio is found in London, where a typical home costs almost 20 times (19.53) average local earnings.

It’s followed by Guildford, Surrey where average property is worth 18.39 times local earnings, and the city of Winchester where it's worth 17.78 times.

Newcastle, where property prices are 4.21 times the average salary, is the most affordable place to live, followed by Bradford and Hull which both come in at 4.62 times.

Victorian maisonette in Sunderland

Above: Up for sale for £160,000, is this four-bedroom maisonette in Sunderland

Sounds interesting. What’s the background?

Zoopla's Lawrence Hall said the situation is particularly tough for first-time buyers looking to buy in areas where property prices are rising faster than salaries.

But he added: “If you can be flexible where you buy, then why not look at areas where salaries are rising faster than property prices? In Chelmsford for example, property prices are rising at a steady rate, but the average salary is going up faster.”

Top 3 takeaways

  • Average property price growth in Britain eclipsed salary increases by a rate of 1.13% in the last 12 months
  • Using the property price-to-salary ratio, in the last 12 months, Luton is the least affordable location and Sunderland the most affordable
  • London house prices are 20 times local salaries. In Newcastle, they are 4 times.

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TOP 10 LEAST AFFORDABLE LOCATIONS BASED ON ANNUAL PROPERTY AND SALARY GROWTH

Rank

Location

Average property price

(June 2017)

Average property price growth since June 2016 (%)

Average salary (June 2017)  

Average salary growth since June 2016 (%)

Salary growth versus property price growth (%)

1

Luton

£259,715

5.06%

£32,067

-2.94%

-7.99%

2

Stevenage

£313,216

1.86%

£32,094

-4.55%

-6.41%

3

High Wycombe

£440,060

4.40%

£29,542

-1.03%

-5.43%

4

Salford

£157,426

5.05%

£27,472

-0.32%

-5.37%

5

Crawley

£329,624

1.33%

£29,517

-3.38%

-4.71%

6

Chester

£254,104

-1.45%

£27,939

-5.44%

-3.99%

7

Wirral

£227,466

2.55%

£27,033

-1.09%

-3.64%

8

Slough

£387,777

0.59%

£30,980

-2.76%

-3.35%

9

Rochdale

£145,115

-1.94%

£24,458

-5.21%

-3.28%

10

Worcester

£258,575

2.17%

£27,937

-1.01%

-3.18%

Source: Zoopla, July 2017

TOP 10 MOST AFFORDABLE LOCATIONS BASED ON ANNUAL PROPERTY AND SALARY GROWTH

Rank

City/Town

Average property price

(June 2017)

Average property price growth since June 2016 (%)

Average salary  

(June 2017)

Average salary growth since June 2016 (%)

Salary growth versus property price growth (%)

1

Sunderland

£140,207

-5.52%

£28,916

2.30%

7.81%

2

Chelmsford

£385,677

0.81%

£31,052

8.48%

7.68%

3

Plymouth

£199,876

-1.93%

£29,397

5.47%

7.40%

4

Aberdeen

£216,498

-2.07%

£32,280

2.84%

4.91%

5

Southend

£289,763

3.90%

£31,212

8.23%

4.33%

6

Guildford

£592,818

-1.57%

£32,227

2.68%

4.26%

7

Swansea

£166,874

-0.78%

£28,611

2.59%

3.38%

8

Cardiff

£233,253

-0.23%

£30,597

2.47%

2.70%

9

Derby

£193,835

-0.78%

£30,192

1.87%

2.65%

10

Winchester

£543,619

-0.20%

£30,583

2.11%

2.31%

Source: Zoopla, July 2017

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