LONDON — The issues in the UK’s housing market are well documented.
Britain simply does not have enough housing, which is pushing prices up and making home ownership unaffordable for much of the population.
The big problem for most Brits is that the price of housing has grown much faster than wages in the past 20 years. That has led to a growing affordability gap, where people simply aren’t earning enough to be able to afford a property. That’s particularly true in London, and for first-time buyers.
New data from the Office for National Statistics released on Friday sheds light on the scale of the problem, noting that since 1997, the average ratio of earnings to house prices has more than doubled.
“Working people could expect to pay around 7.6 times their annual earnings on purchasing a home in England and Wales in 2016, up from 3.6 times earnings in 1997,” the ONS’ release said.
On an indexed basis, with 1997 representing 100, house prices in the UK are now at 358.63, while earnings have only reached 167.82, as this simple chart from the ONS illustrates:
More from Business Insider UK:
- Google responds to YouTube ad boycott: ‘We can do a better job’ (GOOG)
- The 10 things in advertising you need to know today
- One of London’s smallest houses just sold for more than £100,000 over its asking price
- DeepMind organises its AI researchers into ‘strike teams’ and ‘frontiers’ (GOOG)
- The Bank of England’s most hawkish policymaker thinks people are overestimating a key negative of Brexit
NOW WATCH: Robert Shiller on what a rate hike will do to asset prices and who Trump shouldn’t put in charge of the fed
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.