Important points about housing affordability ratios:

The housing affordability statistics are derived from House Price Statistics for Small Areas (HPSSAs), which provide the median and lower quartile price paid for residential properties in England and Wales, and earnings data from the Annual Survey of Hours and Earnings (ASHE), which provides the median and lower quartile gross annual full-time individual earnings.

These housing affordability statistics were formerly produced by the Department for Communities and Local Government (DCLG). The method used to produce the statistics has been developed to include a new, agreed definition of housing affordability. This means that these statistics are not directly comparable with the previously published DCLG statistics, but the entire back series of housing affordability statistics (beginning 1997) has been revised in this publication to enable comparisons over time on a consistent basis.

There are 2 sets of housing affordability ratios in this publication. One is derived from earnings based on employees’ place of work and the other is derived from earnings based on employees’ place of residence. Workplace-based housing affordability ratios are the main measure of housing affordability, and provide an indication of how affordable it is to purchase residential property in the same area as an employee works.

HPSSAs can be revised quarterly, but the annual affordability ratio statistics will not be revised to reflect each quarter, but instead the entire back series will be revised annually as part of each new release.

The house price data used in the affordability ratios in this release are based on the HPSSA data published in March 2017.

Overview

Housing affordability is calculated by dividing house prices by annual earnings. House prices are taken from the House price statistics for small areas (HPSSAs) and refer to the price paid for residential properties in England and Wales. Earnings data are from the Annual Survey of Hours and Earnings (ASHE) and refer to median and lower quartile gross annual earnings for full-time employees.

Housing affordability ratios are derived from annual earnings data where available, but annualised weekly earnings are used when annual earnings are not available from ASHE. Workplace-based earnings refer to the earnings recorded for the area in which the employee works, whereas the residence-based earnings refer to the area in which the employee lives. All earnings in both datasets refer to gross full-time annual earnings where available.

Housing affordability ratios derived from annualised weekly earnings are comparable with affordability ratios derived from annual earnings, but can be relatively unstable over time and across areas because some areas have a greater number of seasonal employees than others. This can affect the median earnings data at different points in the year. Therefore, care should be taken when comparing a housing affordability ratio derived from annual earnings against a ratio derived from annualised weekly earnings.

The earnings data from ASHE provide a snapshot of earnings at April in each year. The house price statistics from the HPSSAs report the price paid for residential property referring to a 12-month period with April in the middle (year ending September). The smallest areas for which statistics are presented are local authority districts, of which there are 348 in England and Wales. The largest area available is England and Wales overall. Other geographies for which statistics are published in this release are English regions and counties.

These housing affordability statistics are used by housing policymakers including central and local government. In particular they are used for assessing local housing needs and in the creation and monitoring of local housing plans.

The full Quality and Methodology Information report for Housing affordability in England and Wales will be published shortly, in the meantime please contact better.info@ons.gov.uk for further information.

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