London is one of eight regions in Britain where house prices are above the long-term affordability ratio of 4.5 times the average earnings of full-time workers who live in the region. The other regions where house prices are 5 times and more the average earnings in full-time workers in the region are South West, Scotland, South East, Eastern England and West Midlands.
There are 12 local areas in Britain where house prices are more than eight times the average earnings of full-time workers who live in the areas. The areas are Hackney, Haringey, Brent, Barking & Dagenham, Newham, Camden, Barnet, Hillingdon, Hounslow, Lambeth, Merton and Cornwall.
Average house prices in the North West are £124,446 which is 4.4 times the average of full-time workers who live in the region. Average house prices in the East Midlands are £126,986 which is 4.4 times the average of full-time workers who live in the region. Average house prices in the North East are £115,445 which is 4.5 times the average of full-time workers who live in the region.
There are 11 local areas where house prices are less than four times average earnings. These are Nottingham, Middlesbrough, Bolton, Hartlepool, Calderdale, Neath Port Talbot, Stoke-on-Trent, Kingston upon Hull, Rhondda Cynon Taff, Blackburn with Darwen and Merthyr Tydfil.
For England and Wales house prices are 5.1 times average earnings. For Britain as a whole the GMB analysis looks at house prices and earnings in 199 areas. In 45 areas house prices are at or below the affordability range of 4.5 times average earnings. There are 127 areas where house prices are 5 times or more than average earnings in each area. In the other 27 areas house prices range between 4.5 and 5 times average earnings.
Paul Kenny, GMB General Secretary, said: “This new analysis shows that house prices in 154 areas in Britain have yet to fall towards the affordability range as they have done in parts of the country. In England and Wales as a whole average house prices need to adjust down by 11% to come into the affordability range although the figure is higher in some parts of the country. This is likely to happen by a combination of a fall in prices and erosion by inflation while wages catch up.
"The irresponsibility of the bankers led to a credit boom that has now given way to the bankers’ recession. It is now clear the extent to which the house price bubble and the speculation in the oil and commodities markets has done serious damage to the UK economy.
"The sooner house prices return to their long-term affordability range the better. The house price bubble has to unwind and that together with the decline in the price of oil, the cut in interest rates and the cut in the VAT rate should mean that there will be more money in the pockets of workers who are able to stay in their jobs. At that point there would be light at the end of the tunnel in this banker’s recession. It is not clear how far away that point is.”
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