New Housing Affordability Ratios Released

Group News

The Office for National Statistics (ONS) released its 2018 house price (existing dwellings) to workplace-based earnings ratio data on 28 March 2019, which provide affordability ratios for all local authorities in England and Wales. Some key points to note are:

  • In England and Wales, the median house price to workplace-based earnings ratio for 2018 was 7.83 as of 2018. This is an increase of 12.6% over the last decade. Between 2017 and 2018, the affordability ratio for England and Wales increased slightly by 0.8% (from 7.77 in 2017 to 7.83 in 2018).
  • Regionally, London has the highest affordability ratio, at 12.25. Since 2008, this has increased by 53.2% (from 8.08 to 12.25), however, between 2017 and 2018, the affordability ratio in London actually decreased by 1.1% (from 12.38 to 12.25).
  • The North East has the lowest affordability ratio of 5.32, representing a decrease of 6.3% since 2008 (from 5.56 to 5.32). Between 2017 and 2018, the affordability ration in the North East increased by 2.1% (from 5.21 to 5.32).

The affordability ratio figures feed into the Government’s standard methodology calculation for housing in England. Pegasus Group has compared the 2017 and 2018 affordability ratios to look at how the new ratios impact on the standard method housing figures. The 2017 affordability ratios were retrospectively updated by ONS in the March 2019 data release. The revised figures for 2017 have been used in the analysis. The timeframe analysed for each ratio is 2019-29 and as per recent government guidance, the 2014-based household projections have been used to inform the standard method calculation.

The standard method figures presented are uncapped and do not take into consideration whether the local authority’s Local Plan is within five years from its adoption date. Key points to note from the analysis are:

  • Using the 2017 affordability data, the total standard method figure for housing in England was just over 297,000 per annum between 2019 and 2029. When the 2018 affordability ratios are used in the calculation, this increases by just over 1,400 (0.5%) dwellings – to just under 299,000 dpa.
  • Looking at individual local authorities, South Bucks sees the biggest percentage increase in its uncapped standard method target between the two affordability ratio datasets, with an increase of 9.0%. This represents an increase in the standard method figure of 48 (from 536 dwellings per annum to 584 dpa). The local authority with the second highest percentage increase is Brentwood at 8.9% (an increase of 42dpa – from 469 dpa to 511 dpa).
  • South Lakeland saw the largest percentage decrease between the two affordability ratio datasets at 6.3% (a decrease of 13dpa – from 205 dpa to 192 dpa). The authority with the second largest decrease is Wandsworth at 5.3%. This represents a decrease of 148 dpa – from 2,817 dpa to 2,669 dpa.

The map provides further detail on the percentage change in the standard method figures for local authorities between the 2017 and 2018 affordability ratio data.

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