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

Not surprisingly London tops the bills at 9.4. 

The ‘cheapest’ country relative to earnings is Scotland where house prices are 3.6 times average gross earnings.

The North/South divide still exists with the north of England being ‘cheaper’ than the regions south of the Midlands.

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.