Posts with tag: housing affordability

Housing Affordability has only Improved for 2% of Occupations since 2011

Published On: March 24, 2017 at 9:15 am


Categories: Finance News

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Housing affordability has only improved for 2% of occupations since 2011, due to soaring house prices and stagnant wages, according to new research from Private Finance.

The independent mortgage broker’s analysis of average gross annual earnings and house prices from 2011-16, using official Government data, shows that, across 304 occupations for which figures are available, just five have enjoyed enough wage growth to make the average home more affordable.

These five occupations are: Aircraft pilots and flight engineers; electronics engineers; rubber process operatives; energy plant operatives; and merchandisers and window dressers.

Housing Affordability has only Improved for 2% of Occupations since 2011

Housing Affordability has only Improved for 2% of Occupations since 2011

Among this select group, aircraft pilots and flight engineers have enjoyed the greatest five-year pay rise (£22,507). As a result, the average UK house price (£212,748 in 2016) amounted to 2.4 times their gross annual earnings of £89,317, down from 2.5 times in 2011, when they earned £66,810 and the average home cost £167,888.

Electronics engineers have enjoyed the greatest percentage gains (40%) in their gross annual pay over the five years between 2011-16. This pay boost exceeds the 27% growth in house prices over the same period, and has improved their housing affordability from 5.1 times their income to 4.6.

However, despite enjoying percentage pay rises that exceed the 27% house price growth and the average 9% wage growth across all UK employees, the remaining professions in this group of five still need between 6.8 years and 11.5 years of earnings to match the average UK house price – another sign of what the Government has described as a broken housing market.

Private Finance’s analysis goes on to show that, with gross annual earnings of £21,100, the average UK employee needed eight years of earnings to match the average UK house price in 2011. Despite taking home £1,999 (9%) more in 2016, their higher earnings of £23,009 have been outpaced by rising house prices, leaving them needing 9.2 years’ income to afford the standard home.

Aircraft pilots and flight engineers also came out on top when comparing trends among the top ten UK occupations with the highest pay and the best housing affordability ratios.

As a result of their average £22,507 pay rise since 2011, the profession has seen gross annual earnings before bonuses (£89,317) overtake chief executives and senior officials (£84,275) to reach the top of the UK pay structure, as documented by the Office for National Statistics. This leaves them as the only professionals in the top ten earners to see their housing affordability improve since 2011.

All others, including IT and telecommunications directors, legal professionals and medical practitioners, have seen a measure of tightening in housing affordability, as their pay gains have been left behind by soaring house prices.

The Director of Private Finance, Shaun Church, comments on the findings: “The simultaneous squeeze on earnings and housing stock have piled pressure on many homebuyers, and there are few areas of the UK workforce that have seen their wages rise above the trend of property prices. Barring a few exceptions, even the highest earning professions have not seen their annual pay keep up and aren’t immune to the limits this can place on movement in the housing market, particularly where larger purchases are involved. This is especially true of those working in city hubs, where house price rises have far exceeded the average 27% over the last five years.

“Access to mortgage finance in a growing variety of shapes and forms is increasingly essential for many people to make headway at all levels of the property ladder. The changing nature of employment patterns also means the idea of a one-size-fits-all mortgage is becoming increasingly outdated for a large number of employees.”

He adds: “The rise in self-employment, coupled with trends in pay and bonuses, often means that the most suitable type of finance and the most appropriate lender can only be identified through a detailed assessment of personal circumstances and a knowledge of solutions that exist beyond the high street.”

House of Lords Launches Investigation into Housing Market

Published On: November 4, 2015 at 1:05 pm


Categories: Property News

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House of Lords Launches Investigation into Housing Market

House of Lords Launches Investigation into Housing Market

The House of Lords has launched an “urgent” investigation into the housing market. It has requested opinions to aid its study.

The Economic Affairs Committee is running the inquiry. It will investigate the supply and affordability of housing both for rent and to buy.

It will also analyse the Stamp Duty changes and consider whether rent controls would be a good idea.

The Committee Chairman, Lord Hollick, launched the inquiry, stating: “There are clearly serious issues with the UK housing market. Across the country, young people in particular are struggling with the cost of housing, whether they are looking to buy or rent. There is an affordability crisis in housing.

“We would like to get to the bottom of the affordability crisis. Is the primary cause a lack of supply? What effects have recent Government initiatives to encourage first time buyers had? Or is there too much emphasis on owning your own home and should we be focusing efforts on ensuring adequate affordable housing is available for rent?”1

The Committee is also seeking evidence on:

  • Whether Stamp Duty reforms have had an impact and if there should be further changes.
  • Is there a case for rent controls?
  • Are there any tax measures that could improve housing supply and affordability?

If you would like to give your opinion on these matters, send your written reviews by 17th December 2015 here:
















Young Adult Living With Parents Feel They Don’t Have Independence

Young Adult Living With Parents Feel They Don't Have Independence

Young Adult Living With Parents Feel They Don’t Have Independence

One fifth of working 20-34-year-olds have moved back in with their parents in the last 12 months, reveals recent research by Shelter.

The housing charity’s study also found that 15% have never even moved out of their family home.

YouGov commissioned the survey, which shows that 56% of young adults living with their parents said the reason they were living there is because of the high cost of housing.

Over one third said they were trying to cut down on costs in order to save up for a deposit for their own home and over a fifth (21%) stated that renting is too expensive.

However, living in the family home is also having an emotional impact on young adults. Despite feeling lucky to have the option of living with their parents, 62% said they fear this prevents them from having independence.

Shelter warns that current Government schemes, such as Help to Buy, do not help those on ordinary incomes. It notes that young people are left with just two choices – costly and unstable private renting or living with their parents.

The survey of 4,069 adults was conducted between 21st-23rd September.

















How Properties are Cheap to Own, but Expensive to Buy

Neal Hudson, a housing market analyst at Savills, asks: “Owning a home is as cheap as it’s ever been, so why aren’t more people buying?”

With record low mortgage rates, the annual cost of repaying a home loan is affordable, with the average repayments for first time buyers equal to 18% of their gross annual income.

This means that owning a home is significantly cheaper than renting privately, with rents accounting for 34% of the average household’s income.

How Properties are Cheap to Own, but Expensive to Buy

How Properties are Cheap to Own, but Expensive to Buy

So why is homeownership still out of reach? Being granted a mortgage and affording the repayments is easier now than it was a few years ago, but as Hudson observes, this is “just one part of the funds a prospective first time buyer needs to buy a home.”

The second is a deposit. With more high loan-to-value (LTV) mortgages on the market, the pressure on deposits has eased slightly, but as house prices are many multiples of average incomes, buyers must be able to raise a substantial deposit.

The average first time buyer has an income of £39,000 and a deposit of £29,000, reveals the Council of Mortgage Lenders (CML). This is 76% of their gross income and lower than during the recession. However, it is still much higher than traditional levels.

The CML also found that the average first time buyer in London has an income of £59,000 and requires a deposit equal to 126% of their earnings – £74,000. This is even higher than in 2009, when the recession was at its most severe.

As London house prices are many multiples of a buyer’s income and growing, the repayments on high LTV mortgages are unaffordable for most. Many first time buyers therefore depend on their parents. Young people’s homeownership is increasingly determined by “how lucky their parents were in previous housing market booms.”

Hudson continues: “So, thanks to high house prices relative to incomes, it is the cost of buying rather than the cost of owning that is the biggest barrier to people buying their first home.”

However, Hudson urges buyers to consider the long-term costs of homeownership.

He warns: “Today’s low inflation and high debt environment means many first time buyers could still be spending relatively large proportions of their income on mortgage repayments for almost the entirety of their mortgage term.

“That will lead to fundamental changes in how the market works, with the housing ladder broken in all but the highest demand markets.”1