House prices and earnings

A lot of people seem to think the house price-earnings ratio is 11 times salary, as Business Week claimed, rather than a still-high 6.5 - 7 times. Here, as reminder, is the calculation.

David Smith, EconomicsUK.com - Monday 17th September 2007

Here’s a link to the median earnings figures. As you’ll see, the median in 2006 was £447 a week, £23,244 a year. The median house price in England & Wales in 2006 was £166,000, according to Land Registry data. That gives a house price-earnings ratio of 7.1. To add a further complication house prices have been conventionally measured in relation to male earnings, £487 a week, £25,324 a year, which brings us down to 6.5 - full article