Lloyds: UK home prices at lowest multiple of earnings since 2015

Lloyds calculated that the average UK home costs about 7.3 times average earnings, the lowest price-to-earnings ratio since 2015 and down from 7.6 a year earlier. 1 2 The bank said wage growth outpaced house price growth over the past year. The Daily Mail gave the figures: average prices rose 0.5% to £299,131 while average earnings rose 4.5% to £40,790. 1 2 The calculations compared April to June 2026 with the same period in earlier years, using Lloyds' house price index and Office for National Statistics data. Lloyds said no quarter in the past 11 years had been lower than 7.3. 1

For first-time buyers the ratio is 5.9, down from 6.1. 2 1 The biggest improvements were in regions where prices were already high relative to earnings: the South East fell from 9.7 to 9.1, London from 10.9 to 10.3, Eastern England from 8.7 to 8.2 and the South West from 8.2 to 7.7. London and the South East remain the least affordable regions. 1 Northern Ireland went the other way, with its ratio rising from 5.8 to 6.0 as prices rose faster than wages. Scotland was broadly unchanged at 5.3, and the North East, North West, and Yorkshire and the Humber saw small falls. Lloyds left Northern Ireland out of its local breakdowns because of small sample sizes. 1

Inverclyde and Aberdeen were the most affordable local authorities, at 3.5 times earnings. Kingston upon Hull, Blackpool and Dundee followed at 3.6. 1 2 Elmbridge in Surrey was the least affordable at 17.4, followed by Kensington and Chelsea at 17.3 and St Albans at 14.1. 1 2 In London, Barking and Dagenham was the most affordable borough, at 6.2 times earnings and an average price of £322,675. Kensington and Chelsea was the least affordable, at 17.3 and £895,893. 3

Some traditionally expensive areas improved most, according to Lloyds: Westminster fell from 15.2 to 13.3, Cambridge from 11.4 to 10.0, Elmbridge from 18.7 to 17.4 and the New Forest from 10.1 to 8.7. Some cheaper areas worsened, including Rossendale (4.8 to 5.4), Wrexham (4.9 to 5.5) and Halton (5.1 to 5.6). 2 Lloyds said mortgage costs have risen even as the ratio improved. The Daily Mail reported that average monthly repayments rose from £1,100 to £1,157 over the year, and that a first-time buyer's mortgage payment takes about 34% of income, against 41% for renters. 2 Andrew Asaam, mortgages director at Lloyds, said there were "some encouraging signs" but that affordability "remains stretched for many households", with higher mortgage rates and deposits the main barriers for first-time buyers. He suggested buyers with flexibility look to Scotland and northern England for value. 1

Ian Harris, president of NAEA Propertymark, said affordability on paper does not always translate into affordability at the point of purchase. 2 The figures arrive as the Government has announced the Your First Home scheme for England, offering first-time buyers a new-build home with a 2.5% deposit and a government loan of 20% of the price. Details are due at the Budget. Rightmove analysis cited by the Daily Mail says it could raise the maximum price an average solo buyer can afford from £216,758 to £265,703. 1 2