First Time Buyer: Average House Price to Earnings Ratio
Divide the average house price by the average (gross) earnings and you get the ‘Average House Price/Earnings ratio’.
This is a key indicator of how much people are stretching themselves to get on the housing ladder.
The long term average has been around 3.5, but as you can see there have been peaks and troughs which have all coincided with housing booms and busts. No coincidence in that, it’s all part of the bubble DNA!
The average at the start of this series was 2.7, so the average house cost 2.7 times the average first time buyers annual earnings.
Today it stands at more than double at 5.6.
Will house prices continue to outstrip earnings or will earnings catch up and improve relative to house prices?
Find out what others are saying on the world famous ‘House Price Crash Forum‘.
Last updated: Q3 2021
Source: Nationwide: First Time Buyer House Price Earnings Ratio
First Time Buyer: Average House Price to Earnings Ratio by Region
First Time Buyer: Mortgage Payments as % of Take Home Pay
First Time Buyer: 2031 House Price to Earnings Ratio Prediction
The UK ‘House Prices to Earnings Ratio’ is on course to hit 6.5 in 2031. Meaning average house prices for first time buyers will be 6.5 times their gross annual earnings.