2014 – 2024: the pitfalls of homeownership

The average UK salary falls £20,000 short of what is needed to afford the typical house price in the country. In the past 40 years, house prices have nearly quadrupled, substantially outpacing income growth. In the last decade, the prospect of homeownership has become increasingly out of reach for many due to the widening disparity between income and housing costs. This gap has become a focal point in the market, underscoring the severity of the UK’s housing crisis. From 2014 to 2024, it’s evident how this issue impacts housing affordability and the financial realities of individuals and families nationwide.

In the first quarter of 2014, the average house price in the UK was £178,124.

In just 10 years, this figure has climbed to £281,913, marking an increase of about 58%.

Over the same period, average annual earnings for full-time employees rose from £27,200 in 2014 to just under £35,000 in 2024. This represents an approximate 28% increase in salaries. Meaning that while property values surged, average income salaries only grew by about half.

To put this into perspective, in 2014, the average house price was about 6.5 times the average annual salary.

By 2024, this had increased to approximately 8.1 times.

This number effectively means that, when you ignore additional expenses, such as living costs, mortgages and taxes, it would take just over eight years for the average person on an average salary of £35,000 to buy a house in the UK.

House prices in the UK have significantly outstripped income growth over the past decade due to several key factors:

  1. Supply shortages: The UK has not built enough houses to meet the growing demand. Despite government targets to build 300,000 homes annually, completions have consistently fallen short.
  2. Low interest rates: Historically low interest rates have made borrowing cheaper, encouraging more people to take out mortgages and buy homes. This increased demand has driven up prices​.
  3. Population growth: The UK population has grown rapidly, leading to increased demand for housing.
  4. Wealth inequality and foreign investment: Significant wealth inequality and foreign investment, particularly in high-value markets like London, have kept property prices high. Wealth passed down through inheritance has also enabled some to afford higher prices, while others struggle.
  5. COVID-19: The pandemic led to a shift in housing preferences, with more people looking for larger homes and more space as remote work became common. This shift increased demand for suburban and rural properties, driving up prices in these areas​.

Overall, these trends underscore the challenges facing prospective homeowners in the UK. It’s no surprise all eyes are focused on what help the housebuilding industry is going to receive, particularly help for buyers in an industry that needs to see more people on the ladder. To delve deeper into Britain’s housing crisis, why not check out our other blogs? For a comprehensive overview, read “britain’s housing crisis: a recap” here.