The ability of key public sector workers to purchase their own home continues to improve and is approaching the level achieved 10 years ago before the house price boom.
Halifax research shows that – based on the benchmark ratio of average house price to average earnings, where housing is considered affordable to buy if the ratio is below 4.01 – the average priced home in 38% of towns is affordable for the average key worker to purchase, a rise from 36% in 2012.
Home purchase affordability has improved considerably since 2008 when homes in just 4% of towns (17 in total) were judged to be affordable for key workers to buy. Nonetheless, affordability remains below the 2003 level when the average house was considered to be affordable in 43% of towns.
All key worker occupations analysed – fire-fighters, nurses, teachers, paramedics, and police officers – have seen large improvements in the affordability to buy in the last five years.
Nurses have seen the number of affordable towns increase from 7% to 35%, teachers (both primary and secondary) have seen an increase from 11% to 40%, and fire fighters have seen an increase from 1% to 31%. However, the largest gains have been made by the police (18% to 49%) and paramedics (18% to 50%).
Overall, in the past year, 20 towns have become affordable but 11 have become unaffordable. Among those which have become affordable are Bathgate in West Lothian, Grantham and Margate.
The region which has seen the greatest number of towns – six – switch from unaffordable to affordable is Scotland. At the other end of the scale, the West Midlands saw the most towns – five – become unaffordable for key workers.
There are currently four regions which have an average house price to key worker average earnings ratio of less than 4.0; in 2008 there were no regions where the average priced home was affordable for key workers.
The lowest house price to earnings ratio for key workers in Britain is in the North (3.64) followed by Wales (3.85), the North West (3.87), and Yorkshire and the Humber (3.93). London (7.64) and the South East (6.72) have the highest ratios and are, therefore, the least affordable regions for key workers to buy a property.
Four of the ten most affordable towns for key workers to buy in are in Scotland; Wishaw in North Lanarkshire is the most affordable town in Scotland with an average house price to earnings ratio of 2.60. Cumnock in East Ayrshire (2.64), Irvine in North Ayrshire (2.65) and Clydebank (2.71) are the next most affordable. Port Talbot in South Wales, however, is the most affordable town in Britain for all key workers (2.58).
The least affordable areas for key workers are all in London, where house prices are significantly higher than the national average. The least affordable areas include Islington, Hammersmith and Fulham, Camden, Westminster, and Kensington and Chelsea.
Martin Ellis, housing economist at Halifax, said: “Nationally, there have been considerable improvements in the ability of key public sector workers to purchase their own home since the start of the housing downturn, with 38% of towns now being deemed affordable to buy compared to just 4% in 2008. The greatest concentration of affordable housing is found in towns in northern England, Scotland and Wales. However, there are still significant affordability issues for key workers in London and the South East.
“A combination of declining or static house prices in many areas, combined with some growth in earnings, has contributed to the improvement in housing affordability since 2008. However, significant house price growth in the past decade as a whole has meant that housing is still unaffordable in more than half of the towns surveyed.”