The latest median house price to work-place earnings ratio demonstrates that the affordability of housing nationally has improved from 2023 to 2024, with households across England now needing to spend 7.71 times the median income to access a median priced house, down from 8.40 in the preceding year an 8% improvement. The ratio is at its lowest since 2015.

This improving position is likely, at least in part, to be accounted for by the continued cost-of-living crisis with households now having to spend a greater proportion of their income on basic necessities including heating and food, and thereby having less resource to compete in the housing market, which in turn will have constrained house prices. This should not therefore be taken as being indicative of an improvement in the ability of households to access the housing market. Indeed, given the cost-of-living crisis, it is likely that precisely the opposite is true.

This new data also affects the minimum local housing need that arises from the government’s new standard method, first published in December last year. As the median house price to work-place earnings ratio has improved, the standard method now suggests that there is a need for fewer homes, notwithstanding the deepening housing crisis. According to the standard method, there is now a minimum local housing need for 367,703 homes per annum nationally, down from 370,408 in December 2024, a modest 0.7% decrease. The decrease in the standard method is more modest than the improvement in the affordability ratio due to use of a rolling 5-year average of the affordability ratio within the standard method calculation.

With only 221,071 homes built in 2023/24, a reduction upon the 234,292 delivered the previous year, this emphasises the scale of the task for government to deliver its target of 1.5 million homes over this parliament. The necessary consequence of this is that the need for housing will have increased regardless of the results of the standard method.
In this context, it remains the case that local authorities need to be aiming to deliver all their minimum local housing need to address housing needs in full and to deliver the 1.5 million homes per annum sought by the government.

Furthermore, we strongly believe local authorities need to be aiming above the minimum target to even achieve it. Unforeseen events will always unfold when it comes to delivering specific sites which cause delays and, in some instances, no delivery at all. We have to plan for the fact that not every allocated housing site will be delivered and therefore we have to overprovide in relation to the identification of housing land in local plans to provide any chance of delivering the required numbers and improving the accessibility of the housing market.

The key points to note from a regional perspective with the new affordability ratios are:

  • Regionally, London continues to be the least affordable area with an affordability ratio of 11.06.
  • The East Midlands has shown the highest rate of increase (18.9%) in the affordability ratio over the last decade
  • The North East now has the lowest affordability ratio of 4.85, and the affordability of housing has improved in this region by 8.5% in the last decade (from 5.30 to 4.85).

Pegasus Group has compared the 2023 and 2024 affordability ratios to look at how the new ratios impact on the standard method housing figures. It should be noted that this is initial analysis and may be subject to change.

Impact on the Standard Method

The map below presents the standard method figures based on Pegasus Group’s initial analysis of the data. It shows the annual minimum local housing need based on the Government’s standard method calculation based upon the calculation on 24th March 2025.

Clicking on each local authority on the map also presents the previous annual standard method figure, as calculated in December 2024.

Key points to note from the standard method calculations are:

  • Using the updated 2024 affordability data, the total standard method figure for housing in England was 367,703 per annum. This is a decrease of 2,706 dwellings (0.7%) compared to the calculation in December 2024.
  • Looking at individual local authorities, Staffordshire Moorlands (+5.7%) and Preston (+4.5%) have seen the biggest percentage increases in the minimum local housing need as the affordability of housing has materially worsened in these areas.
  • Kensington and Chelsea saw the largest percentage decrease at 7.1%, this is also the largest absolute decrease of 362 homes per annum – as affordability has improved.
  • In absolute terms, Manchester saw the largest increase in the minimum local housing need with an increase of 80 homes per annum (from 2,430 to 2,510).

Commenting on the new ratios, Matthew Good, Senior Director, says:

“The new data demonstrates that across the nation households now need to spend a lower multiple of their average earnings to access an average priced house than they did previously. This general trend is likely to have been influenced by the continued cost-of-living crisis with households needing to spend a far greater proportion of their income on other necessities, and thereby having less to spend on housing with consequent comparative real term reductions in house prices. It is not therefore necessarily reflective of improvements in the affordability of housing but instead it is likely to be symptomatic of constraints on household finances.

Whilst the new ratios are encouraging, they need to be kept in perspective. Even without the cost-of-living crisis, it would remain the case that housing is unaffordable for a significant proportion of the population given that an average priced house now costs 7.71 times the average income, when mortgage providers will typically only lend between 4 and 4½ times one’s salary.

With the number of homes being built consistently falling below 300,000 per annum the government’s target of delivering 1.5 million homes over the parliament becomes increasingly distant. This allied to the ongoing cost-of-living crisis, means it is unlikely that households will find that the prospects of accessing a home will significantly improve any time soon. As set out in national policy, we need to see an increase in house building across the entire country to support long-term sustainable growth and improve the accessibility of housing.”