The average house in Wales now costs six times the average annual disposable income in the financial year ending March 31 2021, according to a recent report by the Office of National Statistics. The new data released by the ONS shows that the average home in Wales cost around £176,000 in 2021.
Meanwhile, the average household had a median disposable income of £29,356, which meant those households would have had to spend around six times their income to buy a house. Back in 1999, when the figures began to be collected, the average home cost nearly four times the average household income.
On top of this, the average house price in Wales is 12 times the yearly income of the poorest 10% of households. For those in the 10th percentile of household income, they would have to save their entire income for 12.09 years to be able to afford the average home. For those in the 90th percentile - the top 10% of income earners, however, they would only need to save their income for 3.18 years to be able to buy the average house. You can get more property news and other story updates straight to your inbox by subscribing to our newsletters here.
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Over in England, the average household would have to spend 8.7 times their income to buy a typical house. The report concluded that the average home across the border would cost £275,000 to buy in 2021, while the average disposable income would be £31,751 a year. In Scotland, it would be 5.5 times the average disposable income, which would be £166,000 for median house price and £30,300 for median income.
While the peak for unaffordability in Wales was in 2008 - the time of the financial crash and when the average home cost 7.3 times the average salary, affordability ratios in England are worse than at any point since the series began in 1999, with the problem being more acute in London and the south east region of the country.
This comes as a major change for prospective home owners came into effect on Monday, August 1, in which affordability tests for mortgage borrowers have been scrapped by the Bank of England, despite interest rates continuing to rise.
Under the previous rules, mortgage borrowers had to prove they would be able to continue paying their loan if interest rates increased. But it was announced back in June that the Bank of England would be axing affordability tests from August, which some believe will make it easier for would-be homeowners to get loans.
While experts say some groups, such as the self-employed and those who work on a freelance basis, will be helped by the scrapping of 'stress tests', others say the continuation of measures like loan-to-income limits will still make it difficult for first-time buyers to get a mortgage.
With the cost of living rising and inflation at a 40-year high in the UK, thousands of people are struggling to save enough for a deposit for a mortgage. Lenders still use your income to determine how much you can borrow, with most high street banks using 4 to 4.5 times your salary as the measure to decide how big of a mortgage they’ll give you. Many lenders also use their own form of testing to decide how much they think you will be able to pay back. You can read more about this story here.
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