Hong Kong buyers partly responsible for driving UK house price affordability to its worst level in 10 years
- The average house price to income ratio rose to its highest levels since 2011, according to a study by Benham and Reeves
- Since the British government announced the visa offer for BN(O) passport holders in June, London house prices have climbed 7.4 per cent
Benham and Reeves analysed the average house price to income ratio based on average property values and the average net salary over the last 10 years. While the average net salary in the UK grew to £25,123 (US$34,480) in 2020, the average house price was nearly 10 times more at £249,633, corresponding to a price to income affordability ratio of 9.94, meaning a minimum of a year’s salary is needed for the average deposit.
The affordability ratio has increased from 8.16 in 2011, with London remaining the least affordable with a score of 15.74.
“The UK’s house price to income ratio reached its highest point in a decade by the end of 2020, no doubt driven by a steep jump in house prices brought about by the market adrenaline shot of a stamp duty holiday,” said Marc von Grundherr, director of Benham and Reeves.
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The UK announced the stamp duty holiday in July last year after a 0.9 per cent decline in home prices in the April to June period compared to the previous quarter, the biggest drop since the global financial crisis.