Housing Affordability has only Improved for 2% of Occupations since 2011

Housing affordability has only improved for 2% of occupations since 2011, due to soaring house prices and stagnant wages, according to new research from Private Finance.

The independent mortgage broker’s analysis of average gross annual earnings and house prices from 2011-16, using official Government data, shows that, across 304 occupations for which figures are available, just five have enjoyed enough wage growth to make the average home more affordable.

These five occupations are: Aircraft pilots and flight engineers; electronics engineers; rubber process operatives; energy plant operatives; and merchandisers and window dressers.

Housing Affordability has only Improved for 2% of Occupations since 2011

Among this select group, aircraft pilots and flight engineers have enjoyed the greatest five-year pay rise (£22,507). As a result, the average UK house price (£212,748 in 2016) amounted to 2.4 times their gross annual earnings of £89,317, down from 2.5 times in 2011, when they earned £66,810 and the average home cost £167,888.

Electronics engineers have enjoyed the greatest percentage gains (40%) in their gross annual pay over the five years between 2011-16. This pay boost exceeds the 27% growth in house prices over the same period, and has improved their housing affordability from 5.1 times their income to 4.6.

However, despite enjoying percentage pay rises that exceed the 27% house price growth and the average 9% wage growth across all UK employees, the remaining professions in this group of five still need between 6.8 years and 11.5 years of earnings to match the average UK house price – another sign of what the Government has described as a broken housing market.

Private Finance’s analysis goes on to show that, with gross annual earnings of £21,100, the average UK employee needed eight years of earnings to match the average UK house price in 2011. Despite taking home £1,999 (9%) more in 2016, their higher earnings of £23,009 have been outpaced by rising house prices, leaving them needing 9.2 years’ income to afford the standard home.

Aircraft pilots and flight engineers also came out on top when comparing trends among the top ten UK occupations with the highest pay and the best housing affordability ratios.

As a result of their average £22,507 pay rise since 2011, the profession has seen gross annual earnings before bonuses (£89,317) overtake chief executives and senior officials (£84,275) to reach the top of the UK pay structure, as documented by the Office for National Statistics. This leaves them as the only professionals in the top ten earners to see their housing affordability improve since 2011.

All others, including IT and telecommunications directors, legal professionals and medical practitioners, have seen a measure of tightening in housing affordability, as their pay gains have been left behind by soaring house prices.

The Director of Private Finance, Shaun Church, comments on the findings: “The simultaneous squeeze on earnings and housing stock have piled pressure on many homebuyers, and there are few areas of the UK workforce that have seen their wages rise above the trend of property prices. Barring a few exceptions, even the highest earning professions have not seen their annual pay keep up and aren’t immune to the limits this can place on movement in the housing market, particularly where larger purchases are involved. This is especially true of those working in city hubs, where house price rises have far exceeded the average 27% over the last five years.

“Access to mortgage finance in a growing variety of shapes and forms is increasingly essential for many people to make headway at all levels of the property ladder. The changing nature of employment patterns also means the idea of a one-size-fits-all mortgage is becoming increasingly outdated for a large number of employees.”

He adds: “The rise in self-employment, coupled with trends in pay and bonuses, often means that the most suitable type of finance and the most appropriate lender can only be identified through a detailed assessment of personal circumstances and a knowledge of solutions that exist beyond the high street.”