Top 10 areas where homes ‘earn’ more than their owners

Homes in less than one in 10 areas have ‘earned’ more than their owners in the past two years as house price growth continues to slow.

Only 8% of local authority areas recorded increases in property values that have outstripped local average pay during the period, down from 18% in 2017 and 31% in 2016, according to Halifax.

Richmond-upon-Thames was one of the few areas to buck the trend, with house prices rising by £55,483 more than local people earned during the period.

It was followed by Winchester, where homeowners earned an average of £45,016 more from their property than their job, and South Bucks, where property price rises outpaced earnings by £41,376.

Top 10 local authority districts (LADs) over the last two years:

Why is this happening?

A combination of factors has led to a fall in the number of areas in which homeowners earned more from their property than their job.

On the one hand, a combination of economic uncertainty and stretched affordability has put the brakes on house price growth, with increases in property values recently falling to a six-year low, according to the Office for National Statistics.

At the same time, after years of subdued rises, wage growth has started to pick up again and is currently outpacing house price increases.

Who does it affect?

Russell Galley, managing director at Halifax, added: “While the slowdown in house price growth may not be welcomed by homeowners, the narrowing gap between prices and wages should improve mortgage affordability for all, meaning that a larger house, home extension or even a first property are all more attainable.”

However, it is welcome news for homeowners in one of the lucrative areas, who have the potential to crystallise their housing equity when they sell up.

What’s the background?

Six of the top 10 areas where house prices are continuing to outperform salaries are in London and the south east.

West Devon, in the south west, was the area with the biggest difference between house price growth and earnings outside of these regions at £35,460.

Bromsgrove was the only place in the West Midlands to make it into the top 10, with house prices outstripping earnings by £25,303, while Harborough was the only local authority in the East Midlands on the list, with homes there earning £14,437 more than their owners in the past two years.

Despite 28 local authorities seeing house price growth outpace local earnings, on a regional basis, earnings were higher than house price gains across the UK.

The biggest gap was in Scotland, where people earned an average of £35,250 more than their home increased in value, followed by Yorkshire and Humber at £32,258 and the north west at £32,114.

London had the smallest gap, but even here earnings outpaced house price rises by an average of £19,649.

Regional performance over the last two years: 

A similar pattern was seen over a longer period, with London the only region in which house price increases outstripped average earnings over five years, with homes making £23,817 more than their owners.

At the other end of the scale, people in Scotland earned £79,675 more than their homes in the same period.

Regional performance over the last five years:

On a local authority basis, homeowners in Three Rivers in Hertfordshire saw the biggest gains, with their properties earning an average of £88,281 more than them.

It was followed by Waltham Forest and Brent, both in London, where house price gains outstripped earnings by more than £78,757 and £78,667 respectively.

Top 10 LADs over the last five years:

Top three takeaways

• Homes in less than one in 10 areas have earned more than their owners in the past two years as house price growth continues to slow

• In 2017, house price rises in 18% of areas outstripped earnings, and in 2016 the figure stood at 31%

• Richmond-upon-Thames was one of the few areas to buck the trend, with house prices rising by £55,482 more than local people earned during the period