Prospective buyers on the Isle of Wight have to spend almost eight times their annual salary on average to buy a home, housing affordability figures reveal.
Each year the Office for National Statistics calculates how affordable housing is in England and Wales, by dividing the median house price in local authorities by the median full time annual income.
The higher the ratio is, the less affordable homes are to buy. The ONS uses the median instead of the mean as the average, which is the exact middle number in a series, so not distorted by the extreme highs and lows.
Affordability ratio
On the Isle of Wight last year the affordability ratio was 7.65. The average house price was £200,000, compared with the average annual salary of £26,133.
Driven by rising house prices, the Isle of Wight is becoming less affordable. In 2016 the ratio was 7.52.
Gulf between earnings and house prices
The average house price on the Isle of Wight increased by £10,000 in 2017. Median yearly earnings actually rose by £855, however this was not enough to improve housing affordability.
This vast gulf between earnings and house prices highlights the current crisis, which has put buying a home out of reach of many.
Comparing data
The drastic increase in house prices since 2002, which was when the ONS first began comparing this data, reinforces this.
The average home on the Isle of Wight then cost £105,000. The 2017 figure is 90% higher. In that time the average annual salary has only increased by £8,676, a 50% rise.
Generation Rent
Nationally the proportion of households renting has doubled over the last decade, creating a so called “Generation Rent”.
Renting families struggle for stability, not knowing whether they’ll have to move at the end of the year.
Shelter CEO: Failure to build enough homes
Polly Neate, chief executive of housing charity Shelter, said:
“Decades of failure to build enough homes has pushed house prices up so high they now wildly outstrip wages in many parts of country.
“This has put immense pressure on our dwindling supply of genuinely affordable housing especially in areas with good job opportunities where families naturally want to set down roots.
“With millions struggling to find a stable home, it’s time the government offered people a long-term alternative to homeownership by building homes that are genuinely affordable to rent, including many more social homes.”
Below the national average
The Isle of Wight’s affordability ratio is below the average for England and Wales.
The ONS report says:
“On average, full-time workers could expect to pay around 7.8 times their annual workplace-based earnings on purchasing a home in England and Wales in 2017, a significant increase of 2.4% since 2016.
“Housing affordability has worsened significantly in 69 local authorities in England and Wales over the last five years, with over three-quarters of these being in London, the South East and the East.”
Article by Data Reporter Ralph Blackburn as part of the OnTheWight’s collaboration with Press Association and Urbs Media
Image: Andy Beecroft under CC BY 2.0
