Average UK Property Value Outpacing Salaries

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The average UK property value has hugely outpaced wages over the past decade, according to new analysis from independent mortgage broker Private Finance.

The broker found that the average UK property value experienced a 43 per cent rise between 2008 and 2018, from £160,954 to £229,861.

In comparison, the average annual UK salary has increased by just 15 per cent from £24,606 to £28,860 over the same period. Had wages experienced the same percentage increase as house prices, the average employee would now be earning £35,187 per year.

London boroughs and the Home Counties have seen the largest increases in UK property value over the ten-year period.

The average property price in Kensington and Chelsea has soared by 85 per cent over the ten-year period, while wages have increased by just 3 per cent.

Had property owners in Kensington and Chelsea seen their wages increase to the same extent as the value of their homes then the average salary in the borough would now be £112,124.

Not only have property owners benefitted from rising UK property values over this period but falling mortgage rates mean that the monthly cost of owning a home has become considerably more affordable – making their return on investment even more lucrative.

From 2008 to 2018, the average two-year fixed rate mortgage at 75 per cent loan-to-value (LTV) has fallen from 4.77 per cent to 1.73 per cent. While UK property values have increased, the average UK property owner who purchased at the end of 2018 would only be paying £18 (3 per cent) more per month on their monthly mortgage payments thanks to falling mortgage rates, this is despite the average loan size increasing by 43 per cent.

Simon Checkley, Managing Director at Private Finance commented: ‘Property first and foremost provides a roof over your head and a place to call home; however, over the long term it can act as a lucrative investment. With falling mortgage rates making the cost of owning a home even more affordable, homeowners’ potential return on investment could be set to become even greater.’

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