‘The Guardian has analysed Land Registry and HMRC data and found that the gap between earnings and house prices has widened to an extent that buyers in England and Wales are having to spend six times their income, with the situation magnified in London where the median house now costs 12 times the median income. In 1995 the average homebuyer would have faced house prices between 3.2 times and 4.4 times their salary, with that figure rising to between 6.1 times and 12.2 times median regional incomes by 2012-13.
Source: The Guardian‘
When discussing affordability, prices as multiples of income are only part of the story, of course. You have also to bear in mind that in 1995 bank rate (or its predecessor) was running at between 6% and 7%. Which is more affordable – a house costing 6 times your salary when bank rate is 0.5%, or one costing three times your salary when it is 6%?
That leaves open the question, of course, what happens when interest rates revert to something closer to historic levels: including the effect on heavily-borrowed landlords prospectively hit by restrictions on tax relief for interest.
