House affordability for key workers improves in the UK

Two in five towns are now affordable for key workers, claims research

Housing affordability in the UK has improved considerably for key public sector workers since house prices peaked in September 2007 with 41% of towns now affordable, compared to 3% in 2007, according to the latest research from the Halifax.

The lender’s survey has found that two in five towns (41%) are now affordable for the average key worker, based on the ratio of average house prices to average earnings. Where the ratio is below four, housing is deemed affordable.

The greatest concentration of this improvement has been in northern England, Wales and Scotland. There are still considerable affordability issues for key workers in London and the South East.

All five key worker occupations analysed, that is nurses, teachers, police officers, fire fighters and paramedics, have seen large improvements in affordability during the period. In 2007, Wishaw in Scotland was the only affordable town for nurses. However, there are now 113 towns that are affordable for nurses.

The most considerable gains have been for teachers with an increase in affordable towns from 6% in 2007 to 47% in 2012, followed by police officers at 15% to 51% and paramedics at 23% to 56%.

Over the past year, 32 towns have become more affordable for key workers, but 15 have become less affordable, resulting in a 4% increase in the number of affordable towns overall. Peterborough, Lincoln, Morpeth, Glasgow, Clacton on Sea, Coventry and Wakefield are amongst those to become affordable over the last. Hinckley in Leicestershire, Newcastle upon Tyne, Dover and Beverley in East Yorkshire are among those that have become less affordable in the past year.

Wales is the most affordable region in the UK for key workers, with an average house price to key worker earnings ratio of 3.6 in 2012. The North at 3.7, Yorkshire and the Humber at 3.8 and the North West also at 3.8, follow closely behind. By comparison, in 2007, no region had a house price to earnings ratio below 5.0. Greater London at 7.6 and the South East at 6.6 are still the least affordable regions for key workers.

The three most affordable towns for key workers are in the North West. Nelson in Lancashire and Bottle in Merseyside are the most affordable towns, both with an average house price to key worker earnings ratio of 2.4, followed by Darwen in Lancashire at 2.5.

The least affordable areas for key workers are all in London and the South East where house prices are well above the national average. These include Kensington and Chelsea at 18.4, Leatherhead at 13.8 and Westminster at 13.7. Clacton on Sea in Essex and Gosport in Hampshire are the only towns in the South East that are affordable and there are none in London.

‘Housing affordability for key public sectors workers has improved significantly across the UK since house prices peaked in 2007. More than four in ten towns are now affordable compared with just three per cent in 2007,’ said Martin Ellis, housing economist at the Halifax.

‘A combination of house price declines and growth in earnings has contributed to this improvement in affordability. However, house prices nationally have changed little in the past year, which together with pressure on public sector earnings, has resulted in only a modest improvement in home affordability for key workers in the past 12 months,’ he added.

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