The income to house price ratio has risen to 8.1 in Britain according to GetAgent.co.uk.
Research by the estate agent comparison site has found that homebuyers across Britain now face a considerably tougher task when it comes to climbing the ladder as heightened market activity due to the stamp duty holiday resulted in a significant jump in the average income to house price ratio.
GetAgent analysed data on both house prices and the average income across Britain looking at how the income to house price ratio has changed since the property tax reprieve was launched last July.
Income Protection: A growing necessity for UK renters
The data shows that back in July 2020 the average person in Britain earned a gross income of £31,770 while the average property price was £239,355. This placed the income to house price ratio at 7.5 – essentially meaning that it would take 7.5 years of the average gross income to fully cover the cost of the average property.
However the latest available data (for May 2021) shows that house prices have climbed to an average of £257,726 across Britain, pushing the average income to house price ratio up to 8.1 – a 0.6% increase in less than a year.
Interestingly, while the average income to house price ratio differs across Wales, Scotland and England, all three nations have also seen a 0.6 increase – despite their SDLT schemes running for different periods.
The South East has seen the largest regional jump, up 0.7 from 9.3 in July of last year. This means that the average home in the region now costs ten times that of the average gross income.
While London is home to the largest current ratio at 11.7, the region has seen the smallest increase, up by just 0.3 since July 2020.
Colby Short, founder and chief executive of GetAgent.co.uk, said: “Much like most government initiatives to stimulate the housing market, a short term focus on house price prosperity is starting to leave a legacy of long market delays, disgruntled homebuyers and some of the worst levels of housing affordability we’ve seen in recent times.
“While it may be accepted that some areas of Britain are home to far higher property values and therefore require a far greater level of earnings, to see this ratio increase so notably across the board, and in less than a year, really highlights the tough task facing today’s aspirational homeowners.”