Being able to afford a house can affect where people chose to work, live and the amount of time spent travelling.
The quality of housing available is associated with poverty and community cohesion.
Affordability ratios calculated by dividing house prices by gross annual (resident) earnings, based the lower quartiles (25th Percentile – a quarter of the way through the range ordered from lowest to highest) of both house prices and earnings. The earnings data are from the Annual Survey of Hours and Earnings which provides a snapshot of earnings at April in each year. Earnings relate to gross full-time individual earnings on a place of residence basis. The house price statistics come from the House Price Statistics for Small Areas, which report the lower quartile price paid for residential property and refer to a 12-month period with April in the middle (year ending September).
By dividing the house price by its earnings for an area, a ratio can serve as an indicator of relative affordability. A higher ratio indicates that on average, it is less affordable for a resident to purchase a house in their local authority district. Conversely, a lower ratio indicates higher affordability in a local authority. While there are many more factors that influence affordability, the simple ratio provides an overview.
Source: ONS House price to residence-based earnings ratio