Houses for first time homebuyers now cost five times their income according to research by Hometrack. And the percentage of income mortgage payments take up, seen as a fairer measure of affordability, has virtually doubled since 1990 to 32 per cent. Figures indicate that just under a quarter of working households have any chance of accessing home ownership in their local area.
The same research also found that throughout England there has also been a dramatic increase in the number of people living in the private rented sector. In eight years the number of moves to the private rented sector increased from 25 to 47 per cent, and now makes up 12 per cent of England’s stock. The proportion of 25 to 34-year-olds who rent privately went up from 19 per cent in 1993 to 35 per cent by 2005, while those who were owner-occupier decreased from 60 to 47 per cent.
The building society, Stroud & Swindon, has calculated that if property prices continue to grow as they have over the past decade, by 2024 first time homebuyers will need £1 million to buy a home. In areas of strong growth this figure could be reached much earlier – London in 11 years, the South East in 15 years and the South West in 16 years. In the past 10 years, salaries have increased by 35 per cent, while house prices across the UK have increased by 135 per cent. As we announced yesterday, the average cost of a house in London has now broken through the £300,000 mark, whereas the average price in England and Wales is now £176,300.
However, yesterday’s house price index from Halifax show that house prices across the country, not London, have actually slowed in September, for the first time since December last year. The national average price fell by 0.6 per cent, although still growing by 10.7 per cent annually. The Bank of England resisted calls to shore up consumer confidence by reducing rates, and announced it would maintain base interest rates at 5.75 per cent.