Employees in England are had to spend around 7.8 times their annual earnings to buy a home in 2020, according to housing affordability data published today by the Office for National Statistics.

In Wales the figure is slightly lower at 5.9 times income.

While there was a small improvement in affordability, the income multiples are largely unchanged from 2019. 

In England, earnings increased slightly more than house prices in 2020. 

The median price paid for properties increased by 2.9 per cent in 2020 compared with 2019, while earnings increased by 3.5 per cent.

In Wales affordability worsened slightly as the median price paid for properties increased by 3.1 per cent in 2020 compared with 2019, while earnings increased by 2.4 per cent.  

At a local level, earnings grew faster than house prices in nearly 60 per cent of local authorities in England and Wales.

While there were small movements in affordability, the ONS says that the changes were not statistically significant.

Copeland, in the North West, remained the most affordable local authority as the average price paid for properties was estimated to be 2.6 times average annual earnings.

Kensington and Chelsea, remained the least affordable local authority, with average house prices estimated at 36.4 times average annual earnings.

New dwellings remained less affordable than existing dwellings in both England and Wales.  

The gap between the most and least affordable local authorities continued to decrease in 2020.

Since 1997 housing affordability has worsened overall.

Over the last two decades, affordability has worsened the most in London, which is driven largely by increasing house prices.

Eight of the 10 least affordable local authorities in England and Wales were in London, while the other two were in the South East.

The most affordable local authorities in 2020 were in the North West, Wales, East Midlands and Yorkshire and The Humber.

The ONS says that today’s data does not reveal the impact of Covid on affordability as the latest earnings figures it has used are for April 2020.

Hargreaves Lansdown personal finance analyst Sarah Coles says: “The official figures show that buying a home of your own didn’t get any less affordable last year, but in reality clearly it did.

“These figures are designed to show average affordability around April, which misses the impact of the pandemic entirely. 

“In reality, throughout the rest of the year, huge price rises helped push property prices even further out of reach.

“First the pandemic shut the market, freezing sales part of the way through, and causing demand to build up. 

“Then it changed the way people wanted to live, as their small flats close to work started to make less sense for their new lifestyle than somewhere with a bit more space – fuelling the fire.

“Finally, it persuaded the government to offer the stamp duty holiday in an effort to get the market back on track when it reopened. 

“This effectively put buyers on the clock, squeezing more demand into a shorter period, and pushing prices up again.

“The average house price also varies enormously, depending on where in the country you want to buy, whether you want a new-build, and increasingly whether you’re buying a flat or a house. 

“The most recent ONS figures show the prices of detached houses have boomed 8.6 per cent in a year, while the price of flats is up just 2.6 per cent over that time. 

“It means those trying to sell a flat and buy a house have an even bigger mountain to climb.”

Coles adds: “When it comes to wage rises, averages can be misleading here too. 

“While the average wage increased significantly in 2020, this was partly because so many of the jobs that have been lost to the crisis are low wage roles. 

“This automatically pushes up the average without people actually getting a pay rise. 

“It means in reality, affordability may be even lower.

“And all this has come at a time when mortgages for those with smaller deposits have been even thinner on the ground. 

“Fortunately, things have picked up from the start of 2021, with more lenders returning to the market over the past few weeks. 

“The government’s offer to guarantee 95 per cent LTV mortgages will help support this end of the market still further. 

“However, there are still restrictions on many of these mortgages. Some 95 per cent mortgage lenders, for example, won’t lend on flats or new builds.”

She warns that even those who can qualify for low-deposit deals should be wary given the potential for negative equity.