New research from Lloyds indicates that the average UK home now costs 7.3 times annual earnings, marking the lowest house price-to-earnings ratio since 2015. This figure is down from 7.6 a year ago, reflecting a widening gap between wage growth and house price inflation.
Over the past year, average earnings increased by 4.5% to £40,790, while the average property price rose by just 0.5% to £299,131. First-time buyers also experienced a modest improvement, with their average house price-to-earnings ratio falling from 6.1 to 5.9.
Despite this improvement in affordability relative to earnings, buyers are facing higher monthly costs due to increased mortgage rates. Average monthly mortgage repayments have risen by £57 over the past year, from £1,100 to £1,157.
The most significant improvements in affordability were observed in Southern England's more expensive housing markets. The South East saw its house price-to-earnings ratio fall from 9.7 to 9.1, and London's ratio dropped from 10.9 to 10.3. However, London and the South East remain the UK's least affordable regions.
In contrast, Northern Ireland bucked the national trend, with house prices rising by 7.4% against an earnings growth of 3.7%, leading to an increase in its house price-to-earnings ratio from 5.8 to 6.