Rainham Property: Why the affordability crisis isn’t what you think
The latest figures from the Office for National Statistics (ONS) suggest something rather unexpected. After years of worsening affordability, the picture has begun to improve. Wages have risen faster than house prices since 2021, nudging the headline affordability ratios in the right direction. On the face of it, that feels like progress.
Across the country, the average home now costs around 7.6 times the average earnings, much higher than the 2009 figure of 6.4 yet down from the 2021 peak of 9 times. That is still above the long-term “five times earnings” benchmark often cited as the optimum level, yet the direction of travel is encouraging. The narrative being formed is clear, housing is still expensive, but it is becoming more affordable.
When we bring that story closer to home, the Rainham numbers follow a similar pattern.
Between 2007 and 2014, the average in Medway was 6.0 times the average earnings. It reached 9.0 in 2021 and now stands at 8.4.
At first glance, this reinforces the national message. Affordability is improving, albeit slowly, and the worst may be behind us. Yet while that conclusion is not wrong, it is incomplete. Because the way we measure affordability is not the way people experience it in real life.
The problem with the traditional affordability model
The most quoted measure of affordability compares house prices to annual earnings (as above). It is simple, widely understood, and easy to track over time. Yet simplicity often comes at the cost of accuracy, and this is one of those cases.
This method assumes homes are bought outright, ignoring the role of mortgage finance entirely. It takes no account of interest rates, mortgage terms, or the reality that most Rainham homes are purchased using two incomes rather than one. In short, it reflects a theoretical world rather than the one buyers actually live in.
More importantly, it does not reflect how decisions are made. Buyers do not sit around the kitchen table debating price-to-income ratios. They ask a far more practical question, can we afford the monthly payments?
A more meaningful way to measure housing affordability?
If we want to understand affordability properly, we need to shift the lens. The true measure is not the headline price of a home, but the cost of funding it. In other words, how much of a household’s take-home pay is required to cover the mortgage. That is the number that determines whether a purchase is possible, not a theoretical ratio built on house prices and annual income.
Affordability is not about what homes cost. It is about what they cost you each month. When you look at the market through that lens, the story changes quite dramatically. The numbers begin to reflect lived experience rather than abstract comparisons, and that is where the real insight sits.
If you really want to test affordability in its purest form, you must look at first-time buyers. They are the most exposed to changes in affordability because they typically have the smallest deposits and therefore the highest loan-to-value mortgages. That means their monthly payments take up a larger proportion of their household income, making them the most sensitive barometer of whether the market is genuinely affordable or not.
And in Rainham, when you analyse affordability through that first-time buyer lens, the results are not what most people expect.
Rainham affordability, then and now
Let us go back to 2007, a time many still remember clearly. The average Medway house price was ÂŁ155,000, much lower than todays at ÂŁ310,000. On the surface, 2007 felt like a more accessible property market. Yet when we examine affordability through the lens of monthly cost, a different picture emerges.
In 2007, a typical Rainham first-time buyer household was committing a significant portion of its income to mortgage payments.
49% of Rainham first-time buyers take-home pay in 2007 went on mortgage payments.
Fast forward to today, and despite higher Rainham house prices, that burden has eased.
41% of Rainham first-time buyers take-home pay goes on mortgage payments.
That is not a small improvement. It represents a meaningful shift in household affordability. Buyers today are committing a smaller share of their income to owning a home than they were nearly two decades ago.
A longer-term perspective, the lesson from 1989
To fully appreciate this, it is worth stepping back even further. In the late 1980s, mortgage rates reached levels that would be almost unthinkable today. Interest rates approached 15%, placing enormous strain on household finances.
The result was stark.
74% of Rainham first-time buyers take-home pay in 1989 went on mortgage payments.
Three quarters of a household’s income was required to service a mortgage. By comparison, today’s levels, while still challenging, are considerably more manageable. The idea that affordability has never been worse simply does not align with the historical data.
Why affordability has improved
This shift is not accidental. It is the result of several structural changes in the housing and mortgage markets over the past few decades. Interest rates, while higher than the ultra-low levels of pandemic years, remain far below the extremes of the late 1980s. Mortgage products have evolved, with longer terms allowing payments to be spread more manageably over time.
At the same time, real household incomes have grown, even after accounting for inflation. The mortgage market itself has become more competitive, offering a wider range of products tailored to different buyer circumstances. All of these factors combine to reduce the monthly cost of borrowing relative to income.
And yet, much of the public conversation remains anchored to a measure that overlooks these realities.
The first-time buyer deposit challenge, perception versus reality
None of this is to suggest that buying a home is easy. For many Rainham first-time buyers, the deposit remains the most significant hurdle. Headlines often focus on average deposit figures, which can appear daunting and, in some cases, unattainable.
However, averages reflect behaviour, not necessity. Many buyers choose to put down larger deposits to secure better mortgage rates, often with family support. That does not mean those levels are required for entry into the market.
In reality, 95% mortgages remain a viable option for the vast majority of Rainham buyers with stable incomes and good credit histories. While a larger deposit can improve affordability further, the absence of one does not automatically place homeownership beyond reach.
The role of rents in shaping affordability decisions
There is another dynamic at play that is often overlooked. Nationally, rents have risen by 22.8% in the last 3 years alone, placing increasing pressure on tenants. In many cases, the monthly cost of renting is now comparable to, or even exceeds, that of a mortgage on a similar property.
The difference lies in what those payments achieve. Mortgage payments contribute towards ownership, building equity over time. Rent, by contrast, provides no long-term financial return and offers little certainty, with increases often occurring year after year.
When viewed through the lens of monthly cost, the decision between renting and owning becomes less about headline prices and more about financial trajectory.
Reframing the Rainham affordability debate
So where does this leave us? The ONS data is valuable. It highlights genuine improvements in affordability when measured against earnings. Yet it captures only part of the picture. By focusing solely on price-to-income ratios, it overlooks the mechanism through which most homes are actually purchased.
When affordability is measured as a proportion of take-home pay, the narrative becomes more nuanced. It reveals that, while challenges remain, particularly around deposits, the ongoing cost of homeownership is often more manageable than many believe.
This does not mean the Rainham property market is easy. It does mean it is more accessible than the headlines suggest.
For years, the dominant narrative has been one of exclusion for first-time buyers. That the Rainham housing ladder has been pulled up, and that those very same Rainham first-time buyers face an insurmountable challenge. And yes, there is some truth in that, particularly when it comes to saving for a deposit. Yet the data, when examined through the lens of real-world affordability, tells a more balanced story. Not one of simplicity or ease, but one of possibility. And sometimes, a shift in how we measure something is enough to change how we understand it entirely.
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