A new report by Shelter shows how drastically house price inflation has outstripped earnings
The homelessness charity Shelter has warned that average house prices in London now cost almost fifteen times the average wage. Since 1969, it says, house prices in the capital have shot up by £421,558, but household income has risen by only £86,318. This means that aspiring homeowners on ordinary incomes have little hope of ever raising enough to own a place.
In a new report entitled ‘Housing Affordability for First Time Buyers’, Shelter says that if the average income of a first time buyer had remained in line with average house prices, first time buyers could be paying as much as 42 per cent less for their first home.
If house price inflation had kept pace with wage increases, a property for a first time buyer would cost around £198,039, instead of £121,166, the average price for a starter home in England currently.
Emma Reynolds MP, Labour’s Shadow Housing Minister, said today:
“The Tory plan is failing working families. For a whole generation of young people and families the aspiration of buying their own home is becoming a distant dream. A record number of young people are still living at home with their parents in their twenties and thirties because they can’t get on the housing ladder.
“The Tories have failed to tackle the shortage of homes and have presided over the lowest levels of housebuilding in peacetime since the 1920s.
“Labour has a better plan for working families. Labour has set out a comprehensive plan to get Britain building and restore the dream of home ownership for the next generation. Labour will get at least 200,000 homes built a year by 2020 and give first-time buyers first call on homes built in local areas of housing growth.”
The gap between what people could have been paying to get on the property ladder had wages and house prices stayed in line, and what they are actually paying, varies throughout the country, from £34,178 in the North East to £139,203 in London, the report finds.
The recent English Housing Survey showed that the proportion of people in England who own their own home is declining rapidly. Shelter says that the implications of this are myriad; renters are much more likely to have problems with damp, mould and overcrowding, as well as suffering from the instability which comes with moving frequently.
Over a third of renters have been in their home for less than a year and 55 per cent less than two. Only 20 per cent of private renters have been in their home for longer than five years compared to almost two thirds of owner occupiers. Rent is also likely to get higher the more someone moves, meaning the chances of saving enough to own a home diminish as time goes by.
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by becoming a Left Foot Forward Supporter today.