House Prices Continue to Outpace Salaries in England and Wales

The latest data from the Office for National Statistics (ONS) reveals that the median average house prices in England are now 7.6 times the median average salary of £39,300, while in Wales, the ratio stands at 6.0 times with average salaries of £35,800. This information was released today and highlights ongoing challenges in housing affordability across the UK.

According to the ONS statistics, the house-price-to-salary ratios in England have shown a gradual decline, with Wales reflecting a similar trend since the significant increases observed in 2020 and 2021, following the COVID-19 pandemic. At that time, house prices peaked at 9.1 times the average salary. In 2024, these ratios were recorded at 7.7 times in England and 5.9 times in Wales.

Nick Statman, CEO of Bettermove, a UK property solutions company, commented on the current state of the housing market, stating, “For many first-time buyers, the challenge of entering the market still remains significant.” He highlighted that deposits are a major barrier for potential buyers, and recent reports of lenders withdrawing sub-4% mortgage offers could further impact buyer confidence.

Statman noted that affordability varies significantly by region, which may lead more first-time buyers to consider options beyond London, where entry prices are lower and overall affordability is more achievable. He explained, “Improved affordability can sometimes encourage more experienced investors to re-enter the market. However, instead, we are seeing signs that some smaller landlords are reassessing their portfolios against new regulatory requirements.”

He also pointed out that many landlords are exploring flexible sale routes to exit the market more swiftly, especially in cases where properties are tenanted or where traditional sales might take longer.

Despite the narrowing gap between median average house prices and wages, Statman emphasised that house prices remain significantly higher than average earnings. He elaborated, “For many first-time buyers, the challenge of entering the market remains significant. Deposits are a major blocker while recent reports of lenders pulling sub-4% mortgage offers may also impact buyer confidence. For example, even at 95% Loan to Value, a 5% deposit on a £300k property is £15k. Then you add legal fees and other costs.”

Regional trends in affordability also reveal stark differences. London continues to exhibit one of the largest gaps, with a ratio of 11.10 between house prices and earnings, compared to northern cities like Leeds, which has a more accessible ratio of 6.48. Statman remarked, “Regional markets can behave very differently even when national affordability figures move in the right direction. In higher-value markets such as London, even small changes in pricing or mortgage rates can have a disproportionate impact on demand, whereas in more affordable regions, buyers and investors are often quicker to re-enter the market.”

On the subject of investors and landlords, Statman noted that improved affordability can sometimes encourage experienced investors to return to the market, as stabilising prices relative to earnings can indicate better buying conditions. However, he cautioned that regulatory changes, such as the anticipated Renters’ Right Act and potential future Energy Performance Certificate (EPC) requirements by 2030, are prompting many landlords to reassess the viability of their properties as long-term investments.

Statman stated, “We are seeing an increasing number of landlords review whether certain properties remain worthwhile long-term investments, with these changes directly increasing costs. We see this mostly with older properties that may require significant EPC upgrades.” He added that signs indicate some smaller landlords are reevaluating their portfolios in light of these new regulatory requirements.

As the market stabilises, Statman predicts an increase in direct and off-market transactions, as buyers and sellers become more willing to negotiate directly, seeking greater certainty or speed in their dealings.