A landlord came in to our office earlier this week to discuss the affordability of property in Sunderland, with the national property market starting to show signs of recovery & house prices starting to slowly rise.
One useful measure when evaluating where to buy is to compare the relative affordability of an area by finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable the property.
When we put this to the test, we found that Sunderland currently has an average property value of £109,600 with the average salary being £18,619. This is a very affordable price to earnings ratio of 1 to 5.89 (properties are worth 5.89 x the average salary)
Meanwhile in Newcastle the property price to earnings ratio is 1 to 7.8, which suggests the average property in Newcastle is much less affordable than in Sunderland.
We also had a look at Durham and found an average salary of £19,383 and an average property value of £119,700. This means that property in Durham is also less affordable than Sunderland, with a price to earnings ratio of 1 to 6.3.
Looking at the national picture it's unsurprising to find that the Northeast compares favourably, with all three Northeast cities having more affordable properties than the national average (which has a price to earnings ratio of 1 to 9.28)
This could mean that now is a brilliant time to invest in property in the Northeast and in Sunderland in particular, whilst the average value of property is low compared to the average salary.
For an investor this is a useful measure when weighing up properties especially when planning their exit strategy, as more affordable properties will be much easier to sell when the time comes to do so.