Wednesday, February 12, 2014

House Prices and Wages

If salaries had kept pace with house price inflation in the last 15 years, you would be paid more than twice as much now. That would mean the average wage would be more than £55,000, according to housing charity Shelter, rather than the official £25,932.

The gap between wages and property prices is widening as salaries remain static and home values soar leaving average earners needing a £29,000 pay increase to be as well off in relation to property prices as they were in 1997.

Worst hit are those in the London borough of Hackney where pay would need to be four times higher than the current average to have kept pace with property.
Average earners take home £31,304 in Hackney, but if wages had matched property inflation, the salary would stand at £131,924. In Westminster the gap climbs to £105,375.

 Workers outside London have also been hit by the double-whammy of effective pay freezes and soaring home prices. People on average wages in Watford and Brighton & Hove would need an extra £47,000 each year to keep up with local house price inflation, while those in Manchester would need to earn £34,000 more.

Soaring house prices have left people being forced to take out larger mortgages with the average first-time buyer loan climbing 11.4 per cent in 2013 to reach £122,040. 

Meanwhile official figures have revealed that more than 3.3 million 20-to-34-year-olds were living with their parents last year in the UK.

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