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This house price to income issue is a very difficult public policy issue. In a world of lower global interest rates it won't be solved by building more homes. Well meaning loan to income limits introduced post crisis are now effectively rationing access to mortgages
Effectively you can only buy a home in some areas if you have a lot of capital or a very high income. Lots of people could afford to buy but are capped out by loan to income limits on mortgages that are much lower than pre crisis
These regulations are well meaning but are predicated on protecting people from a hypothetical future increase in interest rates back to more "normal" levels. If (as seems very likely) there is little prospect of that happening any time soon we are just rationing mortgage finance
With huge social and distributional consequences that have had little discussion. One problem is that an aversion to debt in our national debate means it's a brave politician who will stand up and say we need to allow people to borrow more
Essentially we are collectively taking a huge paternalistic bet that aspirational households who could afford to buy a house need to be protected from a possible future regime change in interest rates and therefore shouldn't be allowed to
This is a huge factor driving the decline in home ownership and the rise of the private rented sector. Essentially in desirable areas you can only buy if you have a lot of capital already, concentrating ownership amongst those who already have assets
