UK housing affordability is expected to improve again next year, with the national house-price-to-income ratio forecast to fall to 8.2 in 2026 – the fourth consecutive annual drop, according to new analysis by London estate agent Benham and Reeves.
The measure peaked at 9.5 in 2022, when double-digit house price growth far outstripped earnings. Since then, affordability has slowly been restored as wage growth has overtaken property inflation.
This year, the average home costs 8.3 times median gross earnings, down from 8.4 in 2024. It continues a steady retreat from 8.9 in 2023 and from 9.5 at the height of the post-pandemic market boom.
Household finances were squeezed hardest in 2022, when property prices jumped 11.2% against wage growth of just 6.9 per cent.
REVERSE TREND
In the years since, the trend has reversed. Average earnings grew 6.3% in 2023 while house prices fell by 1%. In 2024, wages rose 7.1% compared with a 0.9% rise in property values.
The pattern has held in 2025: wage growth of 4.1% is again outpacing the 3% rise in the average home. Forecasters expect the gap to widen next year, with earnings projected to grow 4.7% against a 2.9% increase in house prices.
The cumulative effect is a gradual easing in affordability pressures that have weighed heavily on first-time buyers and movers.
SUSTAINABLE BALANCE
Marc von Grundherr (main picture, inset), director of Benham and Reeves, said: “After years of buyers being squeezed by rapid house price inflation, the tide has finally turned and, with wages now rising faster than property values for several years in a row, affordability is slowly but steadily improving.
“It won’t transform the market overnight, but it does mark a meaningful shift after an extended period of financial strain for anyone hoping to get onto or move up the ladder.
“As interest rates stabilise and economic confidence improves, this more sustainable balance between earnings and house prices should support a healthier, more stable level of market activity in the years ahead.”
