Summary
ONS affordability ratios compare house prices with earnings to show how stretched a local housing market is. A higher ratio means prices are less affordable relative to earnings.
Definition
ONS affordability ratios divide median or lower quartile house prices by median or lower quartile gross annual earnings. Workplace based ratios use earnings of people who work in an area. Residence based ratios use earnings of people who live in an area. Workplace based ratios are useful for understanding local labour market pressure, while residence based ratios are often more relevant when thinking about whether households living in the area can afford local housing. These ratios are best used as area level context, not as a direct mortgage affordability test for one buyer.