The one chart that shows how UK houses are now even more unaffordable

According to the Nationwide building society the ratio of average house prices to average earnings has now hit 5.89 - the highest in eight years.

Ben Chu
Economics Editor
@Benchu_
Thursday 28 April 2016 10:40
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The Nationwide building society has this morning reported that average house prices rose 0.2 per cent this month.

That takes the average house price up to £202,436.

But the most depressing fact in the Nationwide's report is that the ratio of average house prices to average earnings has increased once again.The ratio - which is a decent way of gauging how (un)affordable houses are - grew from 5.84x average earnings in March to 5.89x average earnings in April:

That's the highest ratio since April 2008, when the UK was entering recession.

House price growth is slowing, as the Nationwide's report points. The year-on-year rate of growth fell from 5.7 per cent in March to 4.9 per cent in April. But house prices are still rising faster than peoples' earnings.

The upshot? Houses are still becoming more unaffordable to those on average earnings who want to get onto the property ladder.

But will house prices continue to rise quicker than earnings? The Office for Budget Responsibility certainly thinks so.

Here's what the Treasury's official forecaster said at the time of the Budget in March:

If that's true, we can expect that house price to earning ratio to rise ever higher.

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