Affordable housing in the East Midlands

House prices in only 24 percent of local authority areas in the East Midlands are affordable for local people, according to new analysis published by the TUC.

The TUC analysis of average salaries and house prices by local authority area shows that in 1997 the average house price in the vast majority of local authority areas across the region was less than five times the average worker’s salary.

Only one local authority area in 1997, Rutland, had a housing to wage ratio above five, a level which the TUC believes puts home ownership out of reach of local people, particularly if they only have one salary.

However, over the last 16 years house prices have outstripped wages across the region. Only ten local authority areas now have house prices that are less than five times the average local salary.

Most areas in the East Midlands now have a housing affordability ratio of at least five with even previously affordable areas, including Wellingborough, Chesterfield and Corby, now out of reach for many local people.

The affordability ratio of five is particularly significant as the Bank of England has recently instructed banks to limit the proportion of mortgages they offer that are more than 4.5 times applicants’ salaries.

In 2013, Rutland was still the most unaffordable area with an affordability ratio of 9. Derby was the most affordable area in 2013, whereas in 1997 it had been Lincoln.

Whilst average house prices have yet to reach their pre-recession peak in many parts of the East Midlands, falling real wages mean that homes remain out of reach for local people. Recent analysis by the TUC found that pay packets in the East Midlands fell by around £45 a week in real terms between 2010 and 2013, a fall of 8.7 percent.

Local house prices to wages ratio across the East Midlands, 1997 and 2013