National level data is from Federal Reserve Bank of Dallas' International House Price Database. Each release of the database includes the following time-series: the house price index (HPI), the house price index adjusted for inflation (RHPI), the index of personal disposable income (PDI) and the index of personal disposable income adjusted for inflation (RPDI). The data is reported quarterly and goes back to the first quarter of 1975. We construct a measure of housing affordability as the ratio of RHPI to RPDI. Visit the Federal Reserve Bank of Dallas webpage for detailed description of the data construction methodology.
Regional House Price indices for 13 regions of the UK are published quarterly by the Nationwide. The dataset dates back to the fourth quarter of 1973, but we start our analysis from the first quarter of 1975. To transform the data into real values each regional series is deflated with consumer price index (CPI).
Regional Income data is obtained from the Family Expenditure Survey (FES)*. For each year, starting from 1975, the dataset is split by region** and the data on average total household's weekly expenditure is extracted. The annual data is then interpolated to obtain quarterly series.
*The FES runs from 1961 to 2001. From 2001 it was replaced by a new survey, the Expenditure and Food Survey (EFS), which became the Living Costs and Food Survey (LCF) from 2008.
**Due to the differences in regional classifications, Outer Metropolitan and Outer South East are assumed to correspond to the South East region in the regional classification adopted by the FES.