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House prices grow three times faster than wages

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Average house prices have soared 94 per cent over the last 10 years, while wages have grown just 29 per cent over the same period, according to the National Housing Federation.

Research by the NHF shows average house prices have almost doubled from £121,769 in 2001 to £236,518 in 2011, while the average wage has grown from £16,557 to £21,330.

The amount of deposit required to obtain a mortgage has risen by 386 per cent over the same period, meaning that a deposit for a 90 per cent mortgage has grown from nine months salary to almost three years.

In 2001, the ratio between the average house price and salary was 7.4, but by 2011 that had risen further to 11.1.

National Housing Federation chief executive David Orr says: “These shocking figures show that it is getting increasingly harder for millions of people to buy a home of their own in the current climate. With the gap between income and house prices growing ever wider, people can often feel like they have to win the lottery to be able to buy in their local area.

“A shortage of homes means the price to buy them is being pushed ever higher by the market, and out of reach of millions of hard working families. Unless we start building more homes people can truly afford to match the demand, this will only get worse.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Lies, damned lies and statistics!

    What this ‘research’ from the HBF reveals is not that houses have become more or less affordable but that the Federation has a poor grasp of an appropriate way to research the relative value of a volatile asset. Here’s a clue – start by looking at more than one period.

    According to the Nationwide house price index the average house price was £110,890 in August 2002 – a 94% increase would take this to a tad over £215k. The actual average house price stands at £164,389 – which I reckon is an increase of around 48%. Looks like a case of a typical builders estimate!

    More interesting is perhaps to look at house prices over the last six years. Oh – it appears they have fallen from £167,721.

    David Orr is shocked by the figures? I’m shocked he is given a position of influence.

  2. The cost of building a house has not risen that much. What has risen is the cost or value of the land. Don’t get the two mixed up. Affordable housing will never be available if the cost of the land is not tackled. The only solution is Land Value Taxation.

  3. These figures fully demonstrate the inflationary effects of ‘easy money’ on property values over the past decade or so.

    Belatedly, the punch bowl has been taken away and the next ten years will probably see property prices remain more or less stagnant, whilst wages ‘catch up’ and more new builds are created.

  4. What stupid statistics and what a compltely OTT reaction! Show the same scenario for the last five years and there is a totally opposite picture. Its desperate journalism!

  5. how can you possibly have cheap housing thats a myth, they build more houses, the population grows now we need more houses, they let more people into the country,= more houses, population expansion more houses, we are an island with limited land, those who pays the most wins, is it fair of course not, but thats an unfortunate fact of life.

  6. @ nonny @3.38 pm
    There is plenty of land to build on, butthere is a lack of political will to build on it, mainly at District Council level. There are no votes in granting planning permssion mate. Stop blaming immigrants and start blaming the gutless councillors we have. Building a House costs about 2 years wages- and i mean trandesmen’s wages, everything else is land cost and a bit of profit for the developer.
    @Richard Ross- you have clearly not read the article thouroughly, its not from the HBF the builders lobby group, its from the Housing Charity the NHF. There is a very big difference. and if you don’t think that housing has got less and less affordable over the whole post war era you are inhabiting a parallel universe rather thatn the real world.

  7. @anonymous 3.55

    its a fair cop – I had misread the article. The point that housing is a volatile asset and that over the last six years prices have fallen (and, by implication, affordability, especially given the reduction in interest rates over the period, has risen) remains a valid critique of the research.

    There is a large section of the population that is effectively barred from home ownership. Whether this is a bad thing depends to a large degree on the quality and quantity of affordable alternatives – perhaps the time has come for a wider debate on how we house our population and whether it is appropriate to tie up such a large proportion of the country’s wealth in illiquid housing assets?

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