It brings a whole new meaning to ‘working from home’. New research has revealed that homeowners in one in three UK local authorities ‘earn’ more from their properties than going to work.
I don’t know whether to be thrilled or depressed by this news. Although given I live north of Manchester and (not surprisingly) more than nine out of ten areas where house prices are outpacing earnings are in London, the South East, South West and the East of England, I’m veering towards the ‘crying on the inside’ option.
A closer look at the data from Halifax also shows that London boroughs dominate the top ten list of locations. The biggest gap between rising property values and earnings was in Haringey. According to the bank, house prices here soared by an average of £139,803 over the last two years, exceeding average take-home earnings in the area of £48,353 over the same period – a difference of £91,450, equivalent to £3,810 per month.
Haringey is followed by Harrow with a price growth to earnings difference of £77,791, St Albans (£72,995) and Waltham Forest (£63,646). In total, six London boroughs appear in the top ten districts, including Newham (£63,583), Redbridge (£56,528) and Hounslow (£54,569).
All this is great news if you have no intention of moving and are happy to sit and watch your property tick up in value. And it will also come as a welcome surprise to anyone looking to sell up in one of these places and move to a cheaper area. But if you’re a first-time buyer or looking to buy, not so much.
Martin Ellis, housing economist at Halifax, said: ‘Buoyancy in the housing market over the past two to five years has resulted in homes increasing in value by more than total take-home earnings for the average homeowner in many areas, though mostly in southern England.
‘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. 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 during that time.’
Ain’t that the truth. For some time now, the UK housing market has been dubbed ‘broken’ and not fit for purpose. For a significant proportion of homeowners and househunters, today’s research will do little to dispel this notion.
Helen Nugent is Online Money Editor of The Spectator