Cash in the attic: London homes 'earned' almost twice as much as their owners over the past five years

Despite the recent slowdown in house price growth across southern England, prices in one in five UK areas have significantly outstripped wages over the past five years.
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London homes have 'earned' as much as £117,000 more than the people who live in them over the past five years, according to a new report.

Average house prices in the north-west London borough of Barnet increased by £247,000 in five years, according to the latest figures from Halifax.

Meanwhile average earnings in the borough added up to £130,000 over the same period, meaning that Barnet homes ‘earned’ almost twice as much as their owners.

"Barnet has a very good education record, which is a bit of a magnet for families," says north London estate agent Jeremy Leaf.

"What that tends to mean is that it attracts young professionals but because it is a little bit better value for money than inner London areas and is greener, it also attracts older people who want to be near their grandchildren.

‘Many of these people are asset rich but may not have big incomes and are often trading down from larger properties."

While the difference was greatest in Barnet, the research found that a fifth of local areas in the UK saw average house prices increase by more than total average pay, with nine of the top 10 areas in London.

Average house prices surpassed take-home pay by more than £100,000 in the past five years in three areas, Barnet, Merton, in south-west London and Waltham Forest in north-east London.

Hertsmere in Hertfordshire, one of the Home Counties, was the only area outside London in the top 10 areas where house price growth exceeded wages – by £71,000.

There were only two boroughs where high earners made more money than their properties over five years.

In Hammersmith and Fulham the average salary added up to £145,000 over five years, £67,000 more than house prices rose in the same period, while in Westminster where five-year salaries were the highest in London at £157,000, homes 'earned' £53,000 less than their owners.

“Despite the slowdown in house price growth in southern England, it has still outpaced wages across most of the region,” said Russell Galley, managing director at Halifax.

"This means that middle earners are also facing a challenge getting on to the property ladder."

However, the Halifax data did suggest there was hope on the horizon for hopeful buyers, thanks to stabilising house prices and rising employment in the UK.

It found that the proportion of areas where house prices are outpacing earnings dropped from 31 per cent (or 119 areas) in 2016 to 18 per cent (71 areas) last year.