New research from mortgage broker Private Finance has found that rising house prices and stagnant wages mean that just 2% of UK occupations have seen housing affordability improve over the last five years.
The firm’s comparison of average gross annual earnings and house prices from 2011-2016 using official government data shows that, across 304 occupations where data is available, just five have enjoyed enough wage growth since 2011 to make the average home more affordable to them.
The five are: aircraft pilots and flight engineers; electronics engineers; rubber process operatives; energy plant operatives, and merchandisers and window dressers.
Among this select group, aircraft pilots and flight engineers have enjoyed the biggest 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 five years – not just among this group but across all UK occupations. This pay boost exceeds the 27% growth in house prices over the same period and has improved their housing affordability from 5.1 times income in 2011 to 4.6 in 2016.
However, despite enjoying percentage pay rises that exceed 27% house price growth and the average 9% wage growth across all UK employees, the remaining professions in this select group of five still need between 6.8 years and 11.5 years of earnings to match the average UK house price.
Table 1: Just five UK professions have seen their median gross earnings rise enough since 2011 to make the average home more affordable than five years ago
| Occupation | 2011 (average house price – £167,888) | 2016 (average house price – £212,748) | Changes from 2011-2016 | ||||
| Median gross annual pay | Housing afford-ability ratio* | Median gross annual pay | Housing afford-ability ratio* | Pay rise (£) | Pay rise (%) | Change in housing afford-ability | |
| Aircraft pilots and flight engineers | £66,810 | 2.5 | £89,317 | 2.4 | £22,507 | 34% | -0.1 |
| Electronics engineers | £33,027 | 5.1 | £46,376 | 4.6 | £13,349 | 40% | -0.5 |
| Rubber process operatives | £22,935 | 7.3 | £31,201 | 6.8 | £8,266 | 36% | -0.5 |
| Energy plant operatives | £21,681 | 7.7 | £29,094 | 7.3 | £7,413 | 34% | -0.4 |
| Merchandisers and window dressers | £14,118 | 11.9 | £18,455 | 11.5 | £4,337 | 31% | -0.4 |
Source: Private Finance analysis of official data from the UK House Price Index/Annual Survey of Hours and Earnings. Housing affordability is calculated by dividing the average UK house price for that year by average annual pay.
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 growing house prices: leaving them needing 9.2 years’ income to afford the average home.
Aircraft pilots and flight engineers also emerge as the winners when comparing trends among the top 10 UK occupations with the highest pay and the best housing affordability ratios.
As a result of their average £22,507 pay rise since 2011, this 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 profession 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 rising property values.
Table 2: Only one of the top ten earning jobs enjoy greater housing affordability now than in 2011
| Occupation | 2011 | 2016 | 2011-2016 | ||||
| Median gross annual pay | Housing afford-ability ratio* | Median gross annual pay | Housing afford-ability ratio* | Pay rise (£) | Pay rise (%) | Change in housing afford-ability | |
| Aircraft pilots and flight engineers | £66,810 | 2.5 | £89,317 | 2.4 | £22,507 | 34% | -0.1 |
| Chief executives and senior officials | £71,515 | 2.3 | £84,275 | 2.5 | £12,760 | 18% | 0.2 |
| Air traffic controllers | Unavailable | N/A | £83,128 | 2.6 | N/A | N/A | N/A |
| Marketing and sales directors | £64,515 | 2.6 | £69,732 | 3.1 | £5,217 | 8% | 0.4 |
| IT and telecommunications directors | £57,924 | 2.9 | £69,026 | 3.1 | £11,102 | 19% | 0.2 |
| Legal professionals | £56,048 | 3.0 | £64,522 | 3.3 | £8,474 | 15% | 0.3 |
| Medical practitioners | £62,621 | 2.7 | £63,493 | 3.4 | £872 | 1% | 0.7 |
| Senior police officers | £56,903 | 3.0 | £62,497 | 3.4 | £5,594 | 10% | 0.5 |
| Financial managers and directors | £52,959 | 3.2 | £56,964 | 3.7 | £4,005 | 8% | 0.6 |
| Senior professionals of educational establishments | £47,952 | 3.5 | £52,427 | 4.1 | £4,475 | 9% | 0.6 |
Shaun Church, director at Private Finance, said: “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.
“The rise in self-employment, coupled with trends in pay and bonuses, often mean 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.”
