House price rises outstrip wages, says NHF
The cost of buying a home has risen three times faster than the average salary, according to research published today.
The National Housing Federation found that in 2001 the average price of a home was £121,769, and the average salary was £16,557. In the space of ten years the price of a home has rocketed to £236,518 – an increase of 94 per cent - whereas wages have risen just 29 per cent to £21,330.
On top of rising house prices, saving for a mortgage has become harder with deposits rising by 386 per cent. In 2001 the deposit for a typical 90 per cent mortgage was £12,177, about nine months’ salary.
By 2011 the amount banks were willing to lend was less, and so the deposit needed for a typical 75 per cent mortgage leapt to £59,129, almost three years’ salary.
In 2001 the ratio between average house price and salary was 7.4, but by 2011 that had risen further to 11.1. Regional variations show even greater gaps with the biggest change in Copeland in Cumbria, where house prices rose by 145 per cent and incomes by just 5 per cent.
David Orr, chief executive of the National Housing Federation, said: ‘With the gap between income and house prices growing ever wider, people can often feel like they have to win the lottery to be able to buy in their local area.
‘A shortage of homes means the price to buy them is being pushed ever higher by the market, and out of reach of millions of hard working families. Unless we start building more homes people can truly afford to match the demand, this will only get worse.’