Would-be homeowners have to borrow up to 14 times their average income to be able to afford a house in the most expensive areas of the West Midlands – as new figures showed how house prices have rocketed over recent years. Homes are now almost twice as unaffordable as they were at the turn of the century, as analysis has revealed just how out of reach home ownership can be in some areas.
Figures from the ONS show that in the year to September 2021, the average house in England and Wales cost around 8.9 times the average income – up from 5.1 times in the year to September 2002, making it even more difficult for young adults to get onto the housing ladder.
And it means that even locals on good salaries may struggle to afford homes in the most expensive areas. In Birmingham, house prices are 7.1 times the average income, up from four times two decades ago, while in the Black Country it’s 6.5, up from 3.9.
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In Sutton Coldfield North, the average family would need to borrow 13.7 times the local average yearly income to afford a home, making it the least affordable area in the city. While the average net household income in the neighbourhood is an estimated £36,612 a year, the average house sold for a whopping £500,000 in the year to September 2020.
Meanwhile, a house near the city centre could be bought for just 3.5 times the average household income. The costliest area of the Black Country is Norton South in Stourbridge, where the average family would need to borrow 10.6 times the local average yearly income to afford a home.
Most expensive areas in Birmingham, based on average salaries
- Sutton Coldfield North and Park – average house price £500,000
- Four Oaks – £385,000
- Bournville West – £328,750
- Moseley Village – £365,000
- Brandwood North – £365,000
- Norton South, Dudley – £379,000
- Walsall South East – £355,000
- Streetly North, Walsall – £392,500
- Streetly South, Walsall – £290,000
- Oldswinford and Pedmore, Dudley – £285,000
Cheapest areas in Birmingham
- Central – average house price – £194,500
- Balsall Heath West and Kingswood Road – £132,000
- Winson Green and Gib Heath – £125,000
- Bordesley Green North – £140,000
- Moseley – £158,000
- Wolverhampton Central – £109,000
- Brierley Hill – £124,250
- Palfrey, Walsall – £120,000
- Park Lane, Wolverhampton – £132,000
- Leamore, Walsall – £126,750
At the other end of the scale, a home could be bought for just 4.1 times the average household income in Wolverhampton Central. Since 2014, the Bank of England has set the maximum ratio of loans as 4.5 times income. Only 15 per cent of all mortgages are allowed to exceed this.
Based on this level of maximum borrowing, only four per cent of neighbourhoods in Birmingham and six per cent in the Black Country are actually affordable to those living there, on average. However, the figures don’t include any deposit that a family might have saved.
Across England and Wales, the least affordable area to buy a house is in a neighbourhood in the Knightsbridge, Belgravia and Hyde Park area of Westminster, London. The average house price there, at £2.5 million, is 70.8 times the average income. Meanwhile, the most affordable place to buy a house is in a neighbourhood in the Ayresome area of Middlesbrough, where the average cost of a property in the year to September 2021 was £45,000. That’s just 1.7 times higher than the average income.
Overall, just 12 per cent of neighbourhoods across England and Wales would be affordable to the average household, based on maximum borrowing levels of 4.5 times income.