Home seekers need to spend almost nine times their annual income to buy a property, new figures reveal.
The average house sold in England costs the equivalent of 8.7 times the average annual disposable household income.
Meanwhile, in Wales and Scotland, the multiple was less than six and 5.5 respectively, according to the latest figures from the Office for National Statistics.
The average house sold in England costs the equivalent of 8.7 times the average annual disposable household income, according to the ONS.
This affordability index is below the peaks in Wales, which was in 2007, and Scotland, which was in 2008.
Yet affordability indices in England are now worse than at any time since records began in 1999.
It has led housing experts to describe affordability as a ‘fictitious limit’ for many people, and to say that owning a home is fast becoming a ‘fantasy’.
Andrew Montlake, of Coreco mortgage brokers, said: ‘With shabby inventory levels and a chaotic lack of homes under construction, affordability indices were already bordering on fiction for many.
“But with inflation and mortgage rates now on the rise, affordability is quickly entering the realm of fantasy. Our real estate market is broken due to a lack of new home construction and wage increases that are nowhere near the rate of house prices. In many parts of the country, the UK property market is beginning to resemble something out of a science fiction novel.
Joe Garner, of property developer NewPlace, added: ‘Affordability has become almost an anachronism.
‘In the capital, the affordability crisis is more than extreme. The insatiable demand of an ever-growing population, coupled with a limited supply of homes and a slowdown in the new-build development pipeline, will see home prices continue on an upward trajectory.
“Throw in low wage growth, rising rates and inflation, and the picture becomes even bleaker.”
The ONS said there are large variations in shopping affordability between Britain’s regions.
The ONS said the figures were calculated in the year ending March 2021. Since then, property prices have risen further while wage growth has failed to keep up with inflation.
Timothy Douglas, of industry body Propertymark, said: ‘So far, the sales market has remained buoyant during turbulent times with houses selling extremely fast. But with more potential interest rate hikes on cards and the cost-of-living crisis gripping many people’s finances, the latest data on housing affordability paints a worrying picture.
“As 2021 household income affordability indices and median home prices have worsened to levels that are already concerning, we know that this year, this disproportion will only increase.”
He added that while home price growth could slow towards the end of 2022, the supply of homes to buy would remain out of balance with demand from homebuyers.
“Current vacancy pressures within the market are a key driver of rising house prices, but this is expected to start to subside later this year,” he said.
“However, this will not be enough to even out the imbalance between supply and demand and the efforts that are currently being made are simply not going to deliver the right kinds of houses in the right places that we need on the ground to deal with the demand”.
There are large regional variations in the ONS data, with a median-priced house in the North East costing the equivalent of nearly 12 years’ worth of income for a low-income household, compared to 40 years in London.
Figures are based on median income, as both income and home prices are skewed by some extremely high values.
The ONS defines disposable income as the combination of a household’s income, benefits, pensions, and other income, less the effect of direct taxes such as income tax, social security contributions, and municipal tax.
Median house price in England for the year to March last year was £275,000, while median income was £31,800, yielding a ratio of 8.7 years of income.
In Wales the median price was £176,000 and the receipts £29,400, while in Scotland they were £166,000 and £30,300 respectively.
The research highlighted how revenue was affected by the pandemic during 2021 and is therefore “more uncertain than unusual.”
Over a longer period, the ONS said house prices and earnings in England have risen since 2014 and are now well beyond their 2008 peak. They have also nearly doubled since 1999.