If salaries had stayed in line with house prices since 1997, the average earner in England would be taking home an extra £29,000 a year, earning a total of £55,296, housing charity Shelter has said.
In the regions where the gap between earnings and house prices is widest, such as the London borough of Hackney, the average worker’s annual salary would need to jump by more than £100,000 to give them a chance of getting on to the ladder.
And the house price-earnings gap isn’t just restricted to London. People on average wages in Watford and Brighton & Hove would need an extra £47,000 each year to keep up with local house price inflation, and in Manchester an extra £34,000 would be needed.
Nationally, a couple's earnings would be £44,000 higher today than is the case, had they risen at the same pace as house prices.
The calculations are based on official house prices and earnings data taken from 1997, which are compared with equivalent data from 2012.
In the late nineties the average house cost five times the average salary, but by 2012 it had jumped ten-fold. Between 1997 and 2012 the average house price in England rose from £76,103 to £254,000, while average wages have gone up from £16,500 to £25,932.
‘This leaves thousands of people priced out of the property market and with no choice but to live in unstable private rented homes, or remain in their childhood bedroom well into adulthood,’ Shelter said.
The research is part of Shelter’s ongoing campaign to boost the number of affordable homes in the UK. The charity says initiatives such as Help to Buy haven’t solved housing problems, and that the only solution is to build more homes at an affordable price.