According to Nationwide, the average UK home now costs six times people’s average annual earnings – even though house price inflation is slowing.
The last time the prices/earnings ratio was so high was more than eight years ago, in March 2008.
A survey from mortgage lender Halifax showed that last month, British house prices have surged unexpectedly, contradicting signs of a broad slowdown in the housing market over the last six months.
House prices shot up 1.4 per cent in October, compared with an upwardly revised 0.3 per cent increase in September.
In the three months to October, house prices were a shocking 5.2 per cent higher compared with the same period a year ago.
Howard Archer, chief European and UK economist at IHS Markit, said: “With the economy currently resilient, house prices may well rise modestly in the near term.
“We believe housing market activity is likely to be increasingly pressurised in 2017 by heightened uncertainty constraining consumer confidence and willingness to engage in major transactions, as well as hampering economic activity.”
House prices have rocketed in the past 15 years compared with wage growth. In 2001, the average house cost 3.2 times as much as the average wage – today it is 5.5, according to the Halifax house price index.
Across the country, house prices have grown by more than 8 per cent since the end of 2014, suggesting the gap shows no sign of closing.
It comes as another report revealed that the average single first-time homebuyer today has to save up for 13 years to build a big enough deposit, while for someone in London it could take up to 46 years.
The ‘time to save’ report found buying with someone else as a couple shaves around 10 years off the time it takes to get on the buying ladder.
Doing so would typically bring it down to three and a half years across England and Wales instead of 13 and a half.
The estate agents, Hamptons International, issued their report at the same time as a separate study by Rightmove found the average asking price for a home coming on to the market has passed the £300,000 milestone for the first time across England and Wales.
Halifax said house price growth may ease in the coming months, but low mortgage rates and a shortage of properties for sale should provide support.
The latest figures contrasted with a survey from rival mortgage lender Nationwide, which showed house prices were unchanged last month after rising in each of the previous 15 months.