Londoners needs FOURTEEN TIMES their salary to afford to buy a home…and it’s only going to get worse
Workers in cities across the UK also facing the same struggle as it's revealed people need an average of six times what they make to get on the ladder
LONDONERS now need to borrow a staggering 14 times their annual wage packet to afford to buy a house in the capital, new research has revealed.
And they're not alone. Britain's housing crisis has become so extreme that in other cities such as Oxford and Cambridge budding homeowners still need at least 13 times their yearly salary to get on the property ladder.
Across the UK as a whole, people now need on average six-and-a-half times their annual salary to buy their own home.
According to research for property experts Hometrack, Londoners earn, on average, £33,720 a year while the cost of buying a home in the capital has gone up 86 per cent since 2008 to £482,800 meaning they now need 14.2 times what they make to pick one up, reports .
Workers in Cambridge aren't far behind, earning an average of £30,633 annually but needing 13.8 times their salary to purchase a property in the city where the average price of a house is £420,600.
Oxford is only slightly more affordable with average salaries the same level but average house prices slightly lower at £415,000.
Elsewhere in the country, outside of the more wealthier cities, people are also struggling, with workers in Southampton, earning an average £27,245 a year, needing eight times their income to buy a home of their own, and in Birmingham, where people earn £23,888 on average, they need 5.6 times that amount.
The only city in Hometrack's top 19 worst earning to borrowing ratio list that has remained stable over the past 14 years is Nottingham where potential buyers have needed five times what they make to purchase a property.
Richard Donnell from Hometrack told the website: "In cities where affordability levels are stretched, fewer households are able to participate in the market and this reduces levels of turnover and leads to lower levels of house price growth."
He said this process is underway in London where the annual rate of growth is close to its lowest level for three years and where the top end of the market is registering falling prices.
As a result of being unable to afford to buy in the southern cities, families are being forced to move out to areas where house prices are less astronomical.
But this is putting increasing pressure on prices in cities such as Manchester, Liverpool, Birmingham and Leeds where Mr Donnell said house price inflation is set to rocket.
“Regional cities have more attractive affordability levels and house prices have significant potential upside for growth in the near term subject to the outlook for the economy,” he said.
However, on Wednesday Chancellor Philip Hammond used his first budget statement to announce that buying or renting your home is set to become cheaper – thanks to an extra £1.4billion being propelled into affordable housing schemes by the Government.
The wad of cash, shared between three current schemes – Affordable Rent, Shared Ownership and Rent to Buy.
Local councils can bid for the cash pot and decide which of the three it is best to spend the money on, with the Treasury estimating it will see 40,000 more affordable homes built.
Mr Hammond told the House of Commons the Government was facing a “challenge of delivering the housing where it is desperately needed” and said it needed to focus on investing in infrastructure to support the building of more housing.
He said the Government will invest £2.3billion in a housing infrastructure fund for 100,000 new homes in areas of high demand in addition to the £1.4billion for affordable homes.
Related stories
Campbell Robb, chief executive at Shelter, said: “This extra investment will be welcome news for many of the ‘just about managing’ families crying out for homes that are genuinely affordable. It’s promising to see restrictions on funding relaxed, which should help to build the homes that those struggling actually need – including affordable homes to rent.
“At Shelter we see the impact of our chronic shortage of affordable homes every day, with increasing numbers of people left with no choice but to fork out most of their hard-earned wages on expensive private rents, and wave goodbye to the chance of a stable home.
“As always the devil will be in the detail, and we looking forward to working with the Government to make sure that this funding helps provide homes for those struggling with high housing costs right across the country.”
But Hometrack’s Richard Donnell said: “These measures focus on the longer term challenges of addressing housing supply and will have limited impact on the current profile of housing affordability in the near term which will be dictated by market forces and households’ expectations for jobs and the cost of borrowing.”
While mortgage rates are at their lowest ever level, making it cheap to borrow, it seems fewer people are being approved for a loan.
Yesterday the British Bankers' Association published figures showing that mortgage approvals were 10 per cent down in October from a year earlier.
Matt Andrews, of lender Bluestone Mortgages, told MailOnline: “An annual decrease in mortgage approvals reflects a more cautious approach from lenders, likely as a result of the current uncertainty in the housing market and wider economy.
“Fewer approvals and the continuing squeeze on affordability is pricing an increasing number of would-be homeowners out of the market.”
Slightly more encouraging were the latest house building figures, also out yesterday, which showed housing starts hit at their highest level in more than eight years last quarter while completions rose seven per cent compared with the same quarter a year earlier.
This was a huge rise from 4.1 times average earnings in 2002.
In 2015 the average (median) house price in England and Wales was £207,500, up a whopping 6.4 per cent (£12,500) since 2014.
Meanwhile the average UK house price increased by 8.4 per cent this year.
Over the past 12 months, a typical British home has risen to £219,000 as buyers continue to invest – despite the threat of economic uncertainty.
It’s up 1.3 per cent on the previous month after a strong run of growth since August last year.
The Office for National Statistics revealed the top local authorities that saw a hike in property prices.
They included South Bucks, Basildon, Shetland Islands, Thurrock and in Newham where the average house prise rose to £372,897.
TV property expert Sarah Beeny, owner of estate agent Tepilo, said: “Despite demand from certain types of buyer, such as buy-to-let landlords, falling – there’s still more demand than supply overall in the market, which will ensure the property market remains buoyant and prices continue on an upward trend.”
We pay for your stories! Do you have a story for The Sun Online news team? Email us at [email protected] or call 0207 782 4368