Properties in Westminster cost 24 TIMES the average salary while homes in Blaenau Gwent are best value as UK's affordability gap grows
- Average home costs £875k in Westminster while average wage is £36,519
- In Blaenau Gwent, properties cost £75k with salary at £18,709
- ONS names Blaby, East Midlands, as one of the best affordability spots
By Lee Boyce for Thisismoney.co.uk
Buying a typical property in Westminster cost 24 times the average annual salary in the area last year, making it the least affordable spot in England and Wales to buy a home, official figures have revealed.
With homes in the London borough setting buyers back £875,000 and wages at £36,519, people would find it more difficult than ever before to snap up a property there, data from the Office for National Statistics show.
On the flipside, homes in Blaenau Gwent, Wales, have become more affordable when compared with earnings in recent years – homes there cost £75,000, just four times the average local salary of £18,709.
Soaring prices: In the last few years, property prices in Westminster have soared
It means the gap between the country's most and least affordable homes is growing larger, the ONS said.
In 2012, homes in Westminster cost 16 times average salary in the area, while further back in 2007 a home in the area cost 14 times the average wage and in 2004 12 times the average wage. The rapid increase in property prices means the affordability ratio has doubled in the space of a decade. The decline in affordability comes as a result of bumper price growth in recent years, largely driven by wealthy overseas investors.
At the other end of the spectrum, before the financial crisis, the average home in Blaenau Gwent cost nearly five-and-a-half times the average wage, according to the ONS, which means it has become more affordable.
The price paid for houses in the least expensive 10 per cent of areas in England and Wales has increased three-fold since 1995.
Meanwhile, the most expensive 10 per cent of areas have seen price rises of more than four times the average 1995 price.
Across England and Wales in 2014, average house prices ranged from just under £1.2million in Kensington and Chelsea to £75,000 in Blaenau Gwent.
The average house price for England and Wales overall in 2014 was £194,955, which was 8.78 times the typical wage. In 2002, the house price-to-earnings ratio was smaller, at 6.4.
Over the last 20 years, local authorities with the highest average house prices have tended to be in London and the South East, while local authorities with the lowest prices tended to be distributed across the other English regions and Wales, the report said.
The ONS said that people who earn more are more likely to be able to afford to buy their own home, and this can increase the demand for owner-occupied housing, which in turn pushes up average house prices.
But it named the local authority of Blaby in the East Midlands as an exception to the general trend.
In 2014, the average gross annual salary in Blaby was £25,637, which is in the highest 20 per cent of all local authorities.
But the average house price in Blaby, at £170,000, was below the England and Wales average house price, making Blaby a relatively affordable area to own a home.
The ONS said: ‘One explanation for this is that some of the residents of Blaby work in other local authorities in which average salaries for workers are higher, leading to an increased average income of Blaby residents relative to house prices.’