Houses Affordable in only 61 Local Authorities - Halifax

This will be the third article I have written about the recent figures on UK house prices released by the Halifax, but I have to bring to light something I hadn't noticed until now. In its look at housing affordability in the UK, the Halifax said that the average mortgage repayment was only 31% of an average first time buyers salary.

Regardless of how it reached this figure, or how accurate it is compared to the Nationwide's affordability index which puts it nearer 100% and tracks more with other data, the Halifax's own research revealed in the same document found that first time buyers can actually afford to buy a house in only 61 of the 297 local authorities.

And in reality this doesn't even paint the true picture; a local authority is deemed to be affordable if the average house price is no more than 4.0 times the gross average salary of its residents. This apparently is the average price people have been paying for houses since the 80's.

But that is not strictly true. If you look at the historical affordability indices of both the Halifax and Nationwide, they show that 4.0 times is the threshold; when homes get that expensive a correction starts to become necessary. Because the last crash was the first crash, and it happened the first time the average house cost more than 4.0 times the average salary.

With that in mind perhaps we should be setting a lower reality before we deem a local authority to be affordable.