Login Register
 °

No area left in the South West which has easily affordable housing

By Western Daily Press  |  Posted: September 01, 2014

West housing price crisis as gap increases between salary and house prices

West housing price crisis as gap increases between salary and house prices

Comments (0)

The gap between how much people get paid and how much a house costs has reached "a major crisis point" after research revealed that for the first time ever, houses cost at least five times more than salaries in every single part of the West.

The affordability ratio – which measures how many times higher the average price of a house is compared to the average wage – has rocketed since 1997, and even "cheaper" areas like Bristol, Swindon and Gloucester are out of reach for someone on an average wage.

The research from the TUC points out that the Bank of England has recently instructed banks not to lend more than four and a half times a salary to anyone asking for a mortgage. Now the average house costs more than five times a salary everywhere in the West, campaigners said more homes were needed to bring house prices down.

Back in 1997, the gap was far smaller. Of the 35 local authority areas in the South West, only four had an affordability gap greater than five. Now all of them do, and in some areas, the average house costs ten times more than the average wage.

"Areas across the South West face a major housing crisis," said TUC regional spokesman Nigel Costley. "Over the last 16 years, house price rises have outstripped people's pay packets and left huge swathes unaffordable.

"We need to build more homes to get house prices back under control. With interest rates low, now is the perfect time for an ambitious programme of home-building, which would also help tackle local unemployment problems.

"But as more people give up on buying a home or decide they don't want to get on the housing ladder, we also need a better deal for renters so that they don't get clobbered by soaring rents.

"Housing affordability isn't just about house prices though. Decent wages are just as important and there is a lot of ground to make up before we return to the kind of salaries that people were earning before the crash," he added.

The TUC said it believes that the combination of soaring house prices, stagnating pay in the run-up to the crash and the longest real wage squeeze in over a century will leave house prices more out of reach than ever before.

Recent analysis by the TUC found that pay packets in the South West fell by around £1,800 a year in real terms between 2010 and 2013 – a fall of 6.8 per cent. But house prices continue to rise. In somewhere previously seen as affordable, like South Gloucestershire, the average house price was 3.3 times more than the area's average wage in 1997 – now it is seven times higher. In Bath and North East Somerset, the affordability gap has jumped from 4.62 in 1997 to 8.74 and in Mendip it has more than doubled from a just-about-affordable 3.83 to 7.82.

Five of the seven least affordable places to buy a house are in Dorset, where wages are low but house prices are sky-rocketing. House prices in East Dorset and North Dorset are more than ten times higher than wages. The Cotswolds remain the least affordable with average house prices 11.6 times the average wage of a person working there.

Read more from Western Daily Press

Do you have something to say? Leave your comment here...

max 4000 characters

YOUR COMMENTS AWAITING MODERATION

 
 
 

MORE NEWS HEADLINES