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Homeowners earn more from property than jobs in a third of UK areas

House prices outpace homeowner earnings in 119 local areas over past two years with majority located in the southern England.

The Halifax data has found for 31% of local authority district in 2016 the rise in the value of your home has been greater than the income from your employment up 28% in a year.

Of the 119 areas for 2015 and 2016 outpacing earnings, 93% are in London, the South East, South West and the East of England.

Haringey in London had the greatest increase with average house prices rising in the last 2 years by £139,803 compared to net take-home pay over 2 years of £48,353 leaving a difference of £91,450.

Rising house prices for these homeowners means remortgage buyers can release capital for home improvements such as extension, new kitchen and bathroom which will further increase your homes value.

Top areas outpacing earnings

Martin Ellis, housing economist at Halifax said, the buoyancy in the housing market in the last five years has resulted in house prices increasing values faster than take-home earnings in southern England.

The Halifax report shows the top ten areas with the highest difference in the last 2 years between rise in property values and take-home earnings in 2016.
Local authority House price rise
Excess over earnings
Haringey £139,803 £91,450
Harrow £128,841 £77,791
St Albans £131,645 £72,995
Waltham Forest £111,076 £63,646
Newham £107,302 £63,583
Watford £113,704 £62,571
Slough £103,175 £58,379
Redbridge £109,866 £56,528
Three Rivers £106,135 £56,151
Hounslow £101,940 £54,659
For the top ten the net household net take-home pay over 2 years for each area ranges from Newham on £43,719 to St Albans on £58,651.

With higher house prices in the capital buy-to-let landlords will look to outer London for affordable properties to help improve rental yields.

It is no longer unusual for houses to generate more than take-home pay and people in these areas can build up large levels of equity quickly.

For potential homeowners whose wages have failed to keep pace, such as first time buyers, the cost of buying a home has become more unaffordable during that time, says Mr Ellis.

In addition, for home movers the gap between their current home and the next increases which means they need a larger mortgage.

Other regions with strong gains

Outside of southern England the top performing local authorities are South Northamptonshire in the East Midlands with house price gains of £80,954 and the amount in excess of net take-home pay of £33,514 for the 2 years.

These figures are for 2015 and 2016 with other areas such as Warwick in the West Midlands with excess of £21,240, Trafford in Greater Manchester excess of £14,170 and Harrogate in North Yorkshire excess of £12,508.

The rise in property prices for the older equity release mortgage buyer allows them to access more of the wealth in their homes which they can use home improvements, holidays or giving to a family member.

Some top performing areas posted higher property prices but did not exceed net take-home pay such as the North East with house prices higher by £35,709 over 2 years but with a shortfall on net take-home pay -£3,324.

Scotland the top performing house prices higher by £39,216 with shortfall of -£11510 and Northern Ireland house price gain of £26,799 and shortfall of -£15,951.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.

Learn more by using the equity release mortgage calculator, mortgage cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

For older homeowner releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle or even give to a family member.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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