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One in three UK homeowners earn more from property than work
[LONDON] Home prices in 31 per cent of the UK's local authority districts have risen more than the total average take-home pay of workers in the area over the past two years, according to Halifax.
While homeowners would have to sell their houses to realise those gains, it illustrates how quickly prices have risen, as well as how hard it is for new buyers to get on the property ladder. Rising house prices have helped underpin consumption, the backbone of Britain's economy, even as wage increases have been more modest.
Still, the distribution of gains highlight regional disparities. More than 90 per cent of the areas were in London, the South and East of England, the report published Friday said.
The biggest gap was in Haringey, a borough in the north of the capital city, where house prices increased by an average of £139,803 (S$241,411), exceeding average take-home earnings by £91,450 or £3,810 per month.
"While it's no longer unusual for houses to 'earn' more than the people living in them in some places, there are clearly local impacts," said economist Martin Ellis.
"Homeowners in these areas can build up large levels of equity quickly, but for potential buyers whose wages have failed to keep pace, the cost of buying a home has become more unaffordable."
The only areas where earnings exceeded house price increases were the North East, Scotland and Northern Ireland.