Hometrack has revealed that London house prices have reached a record high and are 14.5 times more than the average salary in the capital.

The average house price in London is currently £496,000, with the average wage at £34,200.

In his Autumn Budget, Phillip Hammond recognised the problems of unaffordability for young people and cut in stamp duty for first-time buyers on homes worth up to £300,000. 

“Unaffordability in London has reached a record high despite a material slowdown in the rate of house price growth over the last year. Lower housing turnover in the capital has led to a tightening of supply in recent months which has stabilised house price growth,” said Richard Donnell from Hometrack.

“Even so, the gap between average earnings and house price in the capital has never been wider.”

Following London, the most expensive area for housing was found to be Cambridge where the average property is 14.3 times the average earnings. Manchester and Birmingham had the highest rates of growth of 7.9 and 7.4 percent.

For most cities beyond the South East, the ratio has stayed more-or-less unchanged in the past 15 years.

“In regional cities outside of the South East, house price growth remains robust as affordability is still attractive and unemployment continues to fall,” said Donnell.

“This can be seen in cities such as Manchester and Birmingham where the current house price-to-earnings ratio is only slightly higher than it has been on average over the last 15 years.”

“As long as mortgage rates remain relatively low and the economy continues to improve, there is a strong feasibility that house prices will rise steadily in regional cities over the next two to three years.”

In London, the cost of housing compared to wages has increased from 14 times the average salary which was found this time last year.