Housing Affordability

Affordability Ratio

The ratio of house prices to earnings is one measure of how affordable it is to buy a property. Lower quartile price provides an indication of the entry level house price in a local market, typically those purchased by first-time buyers.

The ratio of lower quartile house price to lower quartile earnings in 2016 in Somerset was 8.11, compared to 7.16 nationally. The higher the ratio, the less affordable it is for households to get onto the property ladder. The affordability ratio in Somerset is consistently higher than the national average.

Ratio of lower quartile house price to lower quartile earnings, 2002 to 2016

Source: DCLG. Note: This is the ratio of the lowest (25th) percentile of house prices in the area to the lowest (25th) percentile of earnings in the area. The 25th percentile is the value quarter of the way through the range when ordered from lowest to highest.

In West Somerset, house prices at the market entry levels are more than ten times the average earnings figure, making it especially difficult for people to afford their own homes. The ratio is greater than the national average in all Somerset districts. Note that these averages can hide considerable variations within districts, for example between urban and rural areas.

Ratio of lower quartile house price to lower quartile earnings, Somerset districts, 2016

Source: DCLG

For more information about house prices in Somerset see our House Prices page. For more information on earnings see the latest Occupation and Earnings economic factsheet.

Supply of Land for Affordable Housing

The key driver for entering the affordable housing market is the fact that other forms of tenure (home ownership or private renting) are unaffordable. In areas where incomes are low relative to the market price of homes, there is a pressure to provide more homes which those on lower incomes, including those on benefits can afford. Without these homes, many people, especially the very old, very young and the vulnerable, will be forced to move out of the area or into situations that could adversely affect their health and wellbeing.

The 2008 Strategic Housing Market Assessments covering Taunton, South Somerset, Sedgemoor, West Somerset and Mendip indicate that demand for affordable housing is set to outstrip supply and the economic downturn is likely to widen that supply gap.

Accordingly, the past few years have seen an increase in additional social, intermediate and low cost home ownership housing. Mendip, Sedgemoor and South Somerset housing authorities have provided more new properties than at any time in the past decade. Social rental units have comprised the majority of these additional homes, but the proportion that is intermediate housing has increased from 10% ten years ago to 30% as at April 2011.

Housing Targets and Completions, 2013/14