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New Report Reveals Greater Disparity Between Wages and House Prices

House prices in the UK are now six times higher than average earnings, according to a new house price index.

House prices in the UK are now six times higher than average earnings, according to a new house price index.

Compiled by the UK's largest building society, Nationwide, house prices in the UK have risen by around 20% over the last three years, whilst wages have only risen by circa 6% over the same period.


The figures mean that house prices stand six times higher than the average wage - a significant increase from 2013, where the average property value was 5.3 times larger.


The lowering costs of mortgage payments have been able to soften the effects of the disparity between wages and house prices, helping to maintain market movement and buyer confidence.


According to the house price index published by the mortgage lender, October saw year-on-year growth of 4.6% with the average house price standing at £205,904.


Whilst the month-on-month figures demonstrated no change in the market, the less volatile 3-month-on-3-month numbers indicated that the market continues to grow, with an increase of 1.2% - only a slight decrease of 0.1% on September's figures of 1.3%.


Despite the absence of a monthly change, Robert Gardner, chief economist at Nationwide, commented that: '...the annual rate of house price growth slowed to 4.6%, from 5.3% in September, though this is still in line with the growth rates prevailing since early 2015.'


Commenting on the report, property economist at Capital Economics, Hansen Lu, said:


'A gentle recovery in demand, combined with the tight supply of homes for sale, might provide some support to prices, but set against that, house prices are still very high compared to past norms.'


The steady growth within the housing market is expected to continue, with investment management company Jones Lang LaSalle forecasting that UK property prices will se an increase of 13.1% by 2021.

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