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Limits to working households' ability to become home-owners

An analysis - for every local authority area in Great Britain - of the ability of younger working households to buy in their local housing market.

Written by:
Steve Wilcox
Date published:

Building on the earlier Can work; can't buy affordability analyses for England in 2002, this report:

  • sets out average house-price-to-income ratios for younger (under 40) working households in every local authority area in Great Britain in 2004, and;
  • shows the varying extent of 'intermediate housing markets' in each area. It redefines the intermediate housing market to focus tightly on households that can afford more than a social sector rent but still cannot afford to buy at the very bottom end of the housing market.

Both analyses are based on household rather than individual incomes, and on consistent house price measures for two- and three-bedroom homes.

The analyses show not only the more acute affordability pressures within London, the South West and the South East, but also the 'hotspots' where housing is particularly unaffordable in all the regions and countries of Great Britain.

In 2004 there were only three local authority areas where all the younger working households that could afford to pay more than a social rent could also afford to buy housing at the bottom end of the market. In two areas more than a half of the same group of younger working households could not afford to buy.


This study, by Steve Wilcox, analyses the difficulties working households under 40 face in becoming home-owners. Looking at 360 local authority areas of Great Britain, it quantifies the proportions of younger working households who cannot afford full ownership in the open market, with a view to better informing housing policies targeted at this 'intermediate housing market'. The analyses are based on 2004 local prices for two- to three-bedroom homes and the earnings of working households in each local authority area. The study found:

  • In 40 local authority areas, 40 per cent or more of all younger working households can afford to pay more than a social sector rent, but still cannot afford to buy at the lowest decile (10 per cent) point of local house prices. These authorities are spread between London (13), the South East (15) and the South West (11), joined by Ryedale (Yorkshire & Humber). The least affordable areas are Weymouth & Portland, Bournemouth (both Dorset), South Buckinghamshire, Carrick (Cornwall), and Kensington & Chelsea and Harrow (both London).
  • Affordability is most problematic in London, with house-price-to-household-income ratios lower than four to one in only two areas (Bexley and Havering). Outside London, affordability is as problematic in the South West as in the South East.
  • By contrast, in 13 areas only 1 per cent or less of all younger working households cannot afford to buy at the lowest decile point of local house prices. Financial support for home-ownership in those areas might best be justified in terms of social inclusion or regeneration objectives rather than in terms of affordability.
  • The researcher suggests redefining intermediate housing markets as 'working households able to pay a social rent without relying on housing benefit, but unable to afford to buy at the lowest decile point of local house prices'. This market comprises just over a fifth of all younger working households in Great Britain, ranging from 35 per cent in London to just 7 per cent in the North East of England.


The full study involved an analysis of house-price-to-income ratios, mortgage-cost-to-income ratios over time, and a local analysis of house-price-to-income ratios in every local authority area in Great Britain (except the Isles of Scilly) in 2004. Detailed figures are available in the full report. This Findings focuses on the report's analysis of 'intermediate housing markets' – working households who cannot afford full ownership.

Previous analyses have measured intermediate housing markets by, in effect, taking a given product (for example, shared ownership) and identifying the households able to afford that particular product but unable to buy a home outright. This study takes a new approach. It aims to provide a more comprehensive, needs-based assessment of the intermediate housing market; this might inform better targeting of housing market policies and products.

The 2004 analyses in the study are based on local house prices for two- and three-bedroom homes and the incomes of younger working households aged 20-39 (the vast majority of first-time buyers). They comprise:

  • The house-price-to-income ratios analysis: mean average household incomes and house prices.
  • The intermediate housing market (IHM) analysis: working households unable to buy at the lowest decile and lower quarter points of local prices.


0415.pdf (2.11 MB)
185935243x.pdf (408.77 KB)
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