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New build housing affordability improves for third year in a row 

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  • New build property across England and Wales is 9.5 times the average salary in 2020, down for the third year in a row  
  • The North West remains the most affordable region, London the least 
  • The Wirral, Liverpool and Newcastle-under-Lyme most affordable locations; Kensington and Chelsea the least 

New build housing affordability across England and Wales improved for the third year in a row during 2020, Paragon analysis of official figures has shown.  

At £300,000, the average new build property during the year was 9.55 times the average salary of £31,500. This is down from 9.55 in 2019 and a high of 9.67 times salary recorded in 2017

Across England and Wales, new build housing affordability improved in 51% - or 167 of a total of 330 - local authority areas. 

Ratio of house prices of newly built dwellings to average salary

  2019 2020 +/-
England and Wales 9.55 9.50 -0.05
England 9.61 9.60 -0.01
North East 7.71 7.92 +0.02
North West 7.47 7.74 +0.27
Yorkshire and The Humber 7.88 8.33 +0.45
East Midlands 9.10 8.83 -0.27
West Midlands 9.02 9.16 +0.14
East 10.09 10.17 +0.08
London 14.38 14.51 +013
South East 11.08 11.10 +0.02
South West 10.07 9.99 -0.08
Wales 8.11 8.13 +0.02

 

Analysis of the average earnings of the population resident in these regions showed the North West remained the most affordable region to buy a new build property at 7.74 times salary, followed by the North East (7.92). At the other end of the scale, London was the least affordable region at 14.51 times salary, followed by the South East (11.10) and the East (10.17).  

 

Ratio of house prices of newly built dwellings to average salary 2020

  Average salary Average new dwelling price Affordability
England and Wales 31,580 300,000 9.50
England 31,766 304,995 9.60
North East 27,971 221,475 7.92
North West 29,700 229,950 7.74
Yorkshire and The Humber 28,800 240,000 8.33
East Midlands 29,430 260,000 8.83
West Midlands 29,481 270,000 8.83
East 32,944 334,994 10.17
London 38,592 560,000 14.51
South East 34,219 380,000 11.10
South West 30,039 299,995 9.99
Wales 28,273 230,000 8.13

 

Robert Orr, Paragon Development Finance Managing Director, said: “Housing affordability remains an issue across the UK and, whilst it’s positive to see affordability for new build homes improve across England and Wales, the sector needs to look at innovative ways to help people purchase new build homes. 

“The Stamp Duty holiday, Help to Buy and the Government’s 95% mortgage guarantee scheme are certainly a step in the right direction, but the supply side issue needs to be addressed to get more new homes built, particularly by SME developers. At Paragon, we are committed to supporting the sector and we have recently launched 70% Gross Development Value lending to support SME developers, as well as a sub £1 million loan for smaller housebuilders.”  

He added: “Government statistics show there were nearly 150,000 homes completed in England in 2020. Whilst the year was obviously impacted by coronavirus and below historical average, there is a significant shortfall of new homes needed.”  

The Wirral, Liverpool and Newcastle-under-Lyme were the most affordable locations to buy a new home in 2020, followed by Walsall and Copeland.  

All of the least affordable local authorities were located in London or the East of England. Kensington and Chelsea, Westminster and Hammersmith & Fulham were the most expensive areas to buy a new home during the year.

 

Top 10 most affordable local authorities for new build dwellings

  Average salary £ Average new dwelling price £ Affordability ratio
Wirral 28,977 60,950 2.10
Liverpool 30,860 79,995 2.59
Newcastle-under-Lyme 29,849 112,500 3.77
Walsall 27,896 106,245 3.81
Copeland 43,463 207,950 4.78
Carmarthenshire 29,054 260,000 8.83
Stevenage 32,627 195,000 5.98
Doncaster 29,178 174,995 6.00
Fylde 36,089 222,500 6.17
Burnley 25,987 161,995 6.23

 

Top 10 least affordable local authorities for new build dwellings

  Average salary £ Average new dwelling price £ Affordability ratio
Kensington and Chelsea 46,568 1,807,500 38.81
Westminster 43,726 1,456,000 33.30
Hammersmith and Fulham 41,262 1,120,000 27.14
Camden 42,528 1,045,000 24.57
Richmond upon Thames 50,006 1,150,000 23.00
Hackney 37,585 860,250 22.89
Lambeth 42,000 900,000 21.43
Islington 47,120 809,600 17.18
Castle Point 33,671 575,000 17.08
Epping Forest 36,549 599,995 16.42

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551