The house price to earnings ratio in Britain has reached 7.3, its lowest level since 2015, according to research from Lloyds. This figure is down from 7.6 a year ago.
The improvement is attributed to average earnings increasing by 4.5% to £40,790, while average property prices rose by 0.5% to £299,131. For first-time buyers, the ratio improved from 6.1 to 5.9.
Despite this, the full cost of homeownership has been impacted by higher interest rates. Average monthly mortgage repayments have risen from £1,100 to £1,157 over the last year, partially offsetting the gains from wage growth.
Regional variations show a narrowing gap between the most and least affordable housing markets. The South East saw its ratio fall from 9.7 to 9.1, Greater London from 10.9 to 10.3, Eastern England from 8.7 to 8.2, and the South West from 8.2 to 7.7. London and the South East remain the least affordable regions.
In contrast, Northern Ireland was the only nation where affordability worsened, with house prices increasing by 7.4% against a 3.7% rise in earnings, pushing its ratio from 5.8 to 6.
Andrew Asaam, Mortgages Director at Lloyds, noted that while wages have risen and house prices remained relatively stable, affordability remains stretched for many households due to higher mortgage rates and the challenge of saving for a deposit. Ian Harris, President of NAEA Propertymark, added that theoretical affordability does not always translate into practical purchasing power, with buyers still facing higher borrowing costs and needing to compromise on property type, location, or budget.