This is an important question to answer because you generally should invest in suburbs or boroughs where wages are rising the fastest, or the cheapest house in a borough where existing incomes are the highest. Given that London's average annual wage is GBP33k, I will mention the list of boroughs with wages above GBP30k.
Average annual pay 2013:
1. Kensington & Chelsea 39,605 (houses are generally over GBP2m!)
2. Richmond Upon Thames 34,951 (South West London where a 3 bed 2 bath house is over GBP1.5m! A 2 bed 2 bath will look at 750k and above)
3. Wandsworth 34,824. (South West London. Over GBP750k for a house, over 500k for a 2b2b apt). This could be an undervalued borough!
4. City of Westminster 34,092 (Central London. Over GBP2m!)
5. Camden 33,607 (North London. Over 1m for a 3bed 2 bath house, over 750k for a 2b 2b apt).
6. Hammersmith 33,082 (West London. Over 800k for a 3b2b house, over 600k for a 2b2b apt).
7. Kingston Upon Thames 32,153. Similar prices to Richmond.
8. Islington 31,613. North London. Houses over 750k. apartments over 550k.
9. Tower Hamlets 31,378. East London. Houses over 500k. Apartments over 400k. This is one of the most undervalued boroughs in London.
10. Bromley 31,143. South London. Houses over 600k. Apartments over 400k. This is a little further from the central.
From the list below, it appears Bromley, Wandsworth, Hammersmith and Tower Hamlets are the most undervalued boroughs. But one must account for forthcoming supply. Tower Hamlets, Newham and Greenwich account for over 40% of London's supply in the next 3 years. Rents may not increase much in the three boroughs. That leaves Bromley, Wandsworth and Hammersmith.
Is your house earning more than you? The 33 areas where increases in property prices have outstripped local wages
- MailOnline research reveals how increase in prices is higher than salaries
- From Birmingham to Brighton, London to south Wales values have soared
- Chance of getting a mortgage becomes slimmer as each month passes
- George Osborne plans to limit mortgages linked to annual incomes
- Fears the booming housing market could be heading for another bust
Published: 12:39 GMT, 15 June 2014 | Updated: 12:40 GMT, 15 June 2014
Soaring property prices mean that in some areas houses earned more in the last year than the people living in them.
From Birmingham to Brighton, London to south Wales, annual salaries were outstripped by increases in average house prices, research by MailOnline reveals.
The data comes as Chancellor George Osborne moves to tighten the amount buyers can borrow, adding to fears that many people will struggle to ever get on to the property ladder.
Across England and Wales there were 33 areas where house prices rose by more in cash terms than annual local wages, MailOnline research reveals
Across England and Wales, average house prices rose by 7 per cent in the year to April to £172,069, worth an extra £10,809, according to Land Registry figures. By comparison, median earnings in 2013 were £22,045.
However, in some areas the buoyant market added thousands - and tens of thousands - to property prices.
The biggest rise recorded was in Westminster, in central London, where prices rose by an astonishing £160,810 to £976,822 in a year.
Even in the shadow of Big Ben, median average annual salaries in the borough last year were £34,092.
The story was repeated across much of London, with prices up £125,788 in Hackney, where pay was only £27,895, and up £126,587 in Hammersmith where average wages were £33,082.
Outside London, prices rose by £42,411 in Windsor and Maidenhead compared to average salaries of £29,501.
In his Mansion House speech last week, Mr Osborne unveiled plans to give the Bank of England new powers to limit the amount people can borrow.
New rules will cap the size of loans to a multiple of the borrower's earnings, meaning that in areas where prices are rising by more than locals earn in a year, it will become even harder to buy a home.
In the year to March, property prices in London rose by 17 per cent, according to the latest figures from the Office for National Statistics
Nationwide, prices are rising by around 8 per cent, but in some areas the increase is worth more than the average person earns
Chancellor George Osborne last week announced he was giving the Bank of England new powers to limit loans relative to earnings, while Bank governor Mark Carney hinted interest rates could rise before the end of this year
On the south coast, average earnings in Brighton and Hove stood at £22,740 but house prices rose by £28,702.
In Sandwell, on the outskirts of Birmingham, homes rose by £21,945 but average incomes stood at £18,934.
In Wales two areas saw prices earn more than local workers. Powys recorded property price rises of £25,621 in a year, while annual earnings were just £17,725.
In the Vale of Glamorgan, house prices were up £23,124, almost £1,300 more than the average worker in the area earned.
The figures for earnings are pre-tax, so the gap between take-home pay and property price rises will be even greater.
Emma Reynolds, Labour’s shadow housing minister, said: 'These figures show that the dream of home ownership is slipping further out of reach for working people.
'To tackle this crisis we need to build many more homes which is why Labour have repeatedly called for action on housing supply but this government has failed to act. Under David Cameron the number of homes built has fallen to the lowest level in peacetime since the 1920s.
'Labour is clear that you can’t deal with the cost-of-living crisis without building more homes. That’s why Labour has committed to getting 200,000 homes a year built by 2020.'
Booming house prices have trigged warnings that Britain could be heading for a new bust.
The International Monetary Fund warned action was needed around the world to prevent a global crash.
Labour's shadow housing minister Emma Reynolds said the research showed the dream of home ownership is slipping further out of reach
Bank of England governor Mark Carney has hinted that interest rates could rise from their historic low before the end of the year, shattering hopes that any increase would be delayed until after the election in May next year.
There have been fears that the taxpayer-backed mortgages offered through the Help to Buy scheme were increasing demand while the supply of new homes remained low.
Business Secretary Vince Cable, a long-term critic of the scheme, warned banks must not ‘throw fuel on the fire’ of the overheating market by offering cheap loans to people who can barely afford them.
Housing Minister Kris Hopkins said:'Mortgage lending and loan-to-value ratios on new lending remain below historic average – in fact relative to earnings, median house prices across England are around the same level as in 2005.
'Help to Buy has helped thousands of hardworking people buy a new home, with some of the highest sales figures in cities including Manchester Leeds and Durham. Leading developers are building more as a direct result of the scheme, with housebuilding up a third compared to last year and at its highest level since 2007.'
Property prices across London rose by 17 per cent in the year to April, more than double the average for England and Wales.
The highest rises outside London were in the South East and East, up 8 per cent, and the lowest in the North East and Wales, just 3 per cent.
Flats rose by 10 per cent, while all house – terraced, semi- and detached – were up by 6 per cent.
Some 20 areas saw values fall in the year to April, including Blaenau Gwent down 32 per cent, Torfaen 15 per cent and Blackburn 12 per cent.
Prices in Tameside were down 4 per cent, Manchester 3 per cent and Lancashire 2 per cent.
However, there have been signs that the market may be cooling.
The Royal Institution of Chartered Surveyors found demand for properties from prospective buyers slipped back last month for the first time since June 2012.
This is being blamed in part on a mortgage lending clampdown which came into force at the end of April.
Under the new Mortgage Market Review (MMR) rules, mortgage applicants face a tougher application process and questions about their spending habits to check they would be able to cope with a rise in interest rates in the future.
