COVID-19: Read the latest on how we can support your conveyancing journey. Find out more
Falling house prices in London may not be music to the ears of home sellers, but they are making the capital’s property more affordable for buyers.
The latest analysis of the UK’s property market in the Hometrack Cities House Price Index says the gap between earnings and property prices has narrowed in London.
The Office for National Statistics works out affordability ratios by dividing house prices by gross annual earnings.
In 2017, the price to earnings ratio was at a high of 14x. It’s now fallen to 12.7x today, which means an average property will cost a buyer 12.7 x their annual salary.
Hometrack says this 10 percent improvement in the price to earnings ratio takes property affordability in London back to a level last seen in June 2015.
The university cities of Oxford and Cambridge saw a similar drop in the price to earnings ratio, although Hometrack said house price growth elsewhere in the UK has remained broadly stable.
One big exception is Aberdeen where the price to earnings ratio has dropped by 30 percent since 2015.
Hometrack’s monthly report is predicting slow growth in house prices in 2020.
It noted: “While there are signs of firmer pricing in cities across southern England, we expect affordability pressures to limit the scale of price growth over 2020 across southern cities.
“We believe the headline, annual price growth in London will be 2 percent on the back of constrained supply and more realistic pricing.”
Fran is the content writer for Capital Conveyancing, producing articles on all aspects of the conveyancing process and around the UK property market in general. If there is a topic you'd like to see covered on these pages, please drop Fran a line on [email protected]