Does your home earn more than you do?

Money house

If you live in an area where house prices have soared – especially in London, the South East and the east of England – you could find your house has risen more in value than average net earnings in the past couple of years, according to a new report.

Research by Halifax has found that average house prices have outpaced earnings in more than a quarter of local authority districts in the UK –108 out of 380 – over the past two years. In the last year alone, 19% of local authorities have outperformed the average earnings of those living in these areas.

Homeowners in Three Rivers, in Hertfordshire, saw the biggest gap between house price hikes and earnings. House prices have risen by £147,990 in the past two years, exceeding average take-home pay in the area by £97,992.

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Seven London boroughs featured in the list of top 10 areas where house prices exceeded take-home pay. These were Harrow, Greenwich, Hillingdon, Brent, Ealing, Waltham Forest and Merton.

Moving away from London and the South East, top-performing areas were Warwick in the West Midlands and South Northamptonshire in the East Midlands, where house price rises outperformed average earnings by £24,723 and £14,837 respectively during 2014 and 2015.

Halifax also compared average house price rises with pay over five years, and found that all the top performers were in London. The biggest gap was in Hammersmith and Fulham, where average house prices have risen by £248,971, overtaking average take-home pay by £108,653.

House prices rose by 9.7% in January 2016, according to the latest data from Halifax.

‘Makes conditions tougher for first-time buyers’

Martin Ellis, housing economist at Halifax, says: “The housing market recovery over the last few years has led to substantial price rises in some areas of the country, particularly in London, the south east and the east of England. This has resulted in homes increasing in value by more than total take-home earnings for the average homeowner in many areas of the country.

“Clearly, this is good news for some homeowners. However, it does make conditions tougher for those looking to buy their first home in such areas, with prices being pushed increasingly out of range for many young people.”