The capital and the south-east dominate the list of house prices versus earnings over the past two years

Welcome to London, where homes earn more than their owners

Homes have earned more than their homeowners for the past two years in one in five local authorities – almost exclusively in London and the south-east – according to analysis by Halifax.

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The London borough of Hammersmith and Fulham has seen the biggest explosion in house prices relative to pay, Halifax said. Average prices there have gone up nearly £200,000 over the past two years, while households in the area have had median earnings totalling £56,698 over the same period.

Hammersmith is one of just two areas where houses have earned more than their occupants for the past 10 years. The other is Hackney, another London borough.

The figures reveal a deep north-south divide. Of the 73 local authority areas where homes have earned more than their owners over the past two years, 68 are in London, the south-east or the east. The Cotswolds and the Leicestershire areas of Melton and Harborough were the best “performers” outside of the south.

Islington in London tops the table for house prices versus earnings over five years. Householders in the borough typically earned £135,457 in the five years from 2010-2014. Meanwhile, the average home in Islington soared in price by £258,498.

Every one of the 23 local authority areas where homes outstripped homeowner incomes over the past five years were in London and the south-east.

House prices v earnings table: top 10 over past two years

Outside of the capital, Elmbridge and Mole Valley in Surrey, and South Buckinghamshire are areas where homes have earned more than their owners.

Halifax acknowledged that the huge house price gains have benefitted some, but left others struggling.

“This is good news for some homeowners. At the same time, it is challenging news for many looking to buy their first home in such areas, with prices being pushed out of range for many young people,” said Halifax housing economist Martin Ellis.

This is good news for some homeowners … [but] is challenging news for many looking to buy their first home in such areas

Even in parts of the capital with less salubrious reputations, house prices have earned far more than local wages. Brent, which encompasses Wembley Stadium and has been named as one of the worst areas in London for child poverty, came in the top 10 areas in the UK for house prices outstripping earnings. Over the past five years the median household in the borough earned £108,825, or little more than £21,000 a year, but the average house price in the borough has gone up by £156,731.

But recent data from the major indices tracking house prices show that much of the heat in the 2014 market has now dissipated. Halifax said house prices fell nationally by 0.3% in February, cutting the annualised growth figure to 8.3%. London was the only place in the UK where more surveyors reported price declines than increases in February, according to the Royal Institution of Chartered Surveyors.

Separate figures from the Council of Mortgage Lenders show that loans advanced to first-time buyers tumbled again in January, while lending to landlords increased to new highs.



There were 19,000 loans advanced to first-time buyers during the month – down 27% on December’s figure and by 14% compared to January 2014, the CML said. Meanwhile, there were 18,200 buy-to-let loans in January – up 6% on the previous month and up 12% on the same period in 2014.