Average earners need £29k pay rise to keep up with house prices
12 February 2014
Average earners in England would need to more than double their annual salary just to keep up with out of control house prices, new research by Shelter shows.
Wage and house price inflation in each area of the country since 1997 was used to calculate what average annual earnings would be if they’d risen at the same rate as house prices.
In the London borough of Hackney, the average annual salary would need to increase by over £100,000 to be in line with the astronomical increase in house prices.
But dramatic results aren’t restricted to London. The shortage of affordable homes means that 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, and in Manchester £34,000 extra is needed.
Worryingly, there is not a single area in the whole country where wage and house price inflation have remained aligned. Burnley has the smallest gap, but here £10,000 would still need to be added onto the average salary to put it in line with the rise in house prices.
The impact of the housing shortage has been widespread, with the latest Census showing a drop in home ownership in England for the first time since records began.
Angelique (24) works as an engineer and her partner John (29) is an IT manager but, despite both taking home a decent wage each month, the high cost of renting combined with expensive property prices means they don’t think they will ever be able to afford a home of their own.
Angelique said: ‘After rent, food and bills there’s very little left each month, which makes saving enough for a deposit impossible. I always thought that if I worked hard and had a good job I’d be able to get a foot on the property ladder, but that’s just not the case these days.’
Campbell Robb, Shelter’s Chief Executive, said: ‘When you’d need to more than double your salary just to keep up with rising house prices, it is no surprise that the dream of a home of their own is slipping further out of reach for a generation.
‘Politicians need to start meeting people halfway by committing to bold solutions that will get more affordable homes built. Otherwise future generations will find themselves priced out of a stable home, however hard they work or save.
‘The only solution is to build more affordable homes.’