The average price of a home has risen more than three times as fast as the average salary in the last decade according to a report by the National Housing Federation.
The report said that while the average salary has risen by 29% from £16,557 in 2001 to £21,330 in 2011, the price of a home increased by 94% from £121,769 to £236,518 in the same time period.
Meanwhile the average amount needed as a deposit to purchase a home has risen by 386% in the last ten years, according to the report, with many banks less willing or refusing to lend to those with smaller deposits.
David Orr, chief executive of the National Housing Federation, said:
“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.”
Rental prices also on the rise
A separate report by LSL Property Services, a lettings network, suggested that rental prices last month hit a new high.
In July the average rent paid in England and Wales rose by 1% to £725 per month, a new record high. Annual rental inflation has risen from 2.4% to 2.9% according to the report.
The rise in rental prices could be linked to it becoming increasingly difficult to get onto the property ladder. David Newnes, director of LSL Property Services, said:
“The backlog of frustrated first‐time buyers in the private rented sector showed no sign of clearing in July – in fact, it is still growing. As lending to those without substantial deposits remains depressed, demand for rented accommodation can only go one way in the long‐term providing further upwards momentum for rents.”
Unpaid or late rental payments increased from 9.2% to 9.3% from June to July, Newnes said:
“With the economy still in recession, and rents climbing to a new record high, the minority of tenants experiencing difficulty in meeting the monthly rent cheque on time is steadily climbing. However, this has not yet fed through into increased mortgage arrears for landlords, with the number of buy‐to‐let mortgages over three months in arrears actually falling compared to last year.”