True cost of housing reaches record breaking high

True cost of housing reaches record breaking high

0:01 AM, 7th July 2023, About 8 months ago 2

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Housing affordability is at its worst in decades, according to new research.

According to House Buyer Bureau, today’s homebuyers have by far the toughest financial task when it comes to housing affordability – with house prices sitting at 8.8 times the average earnings.

The research reveals the average house price throughout the 1970s sat at just £9,277, the equivalent of £68,493 today after adjusting for inflation.

House prices explode over the last decade

Although the average home may have been significantly more affordable when compared to the current market, the average earnings were also far lower at £2,265 or £16,723 after adjusting for inflation.

The average home during the 70s required 4.1 times income.

Managing director of House Buyer Bureau, Chris Hodgkinson, said: “You have to feel for today’s homebuyers who have seen house prices explode over the last decade or two, in particular, while the earnings on offer to them have failed to keep pace.

“As a result, they require over double the level of income to cover the cost of a home compared to their previous counterparts looking to purchase back in the 70s.”

Homebuyers paying through their teeth when looking to secure a mortgage

Homebuyers today have never had a harder task when looking to climb the property ladder.

This decade have seen the average house price hit £286,489, 318% higher than the average seen throughout the 70s. While the average earnings have also increased to £32,432, this marks just a 94% increase in earnings.

Mr Hodgkinson added: “As if this wasn’t bad enough for homebuyers, they’ve been further squeezed by high levels of inflation and the cost-of-living crisis in recent months and, as a result, are now paying through their teeth when looking to secure a mortgage due to interest rates hitting 5%.”

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David Nichols

11:36 AM, 7th July 2023, About 8 months ago

Might be worth listening to latest property podcast with the 2 Robs.
Apparently house prices uk average have only doubled since 2003 being 20 years. Works out 3.5% compound interest which matched inflation through this period.
Historically 8.5yrs is the average for house prices to double, and between 1971-74 they doubled in 3 years.
Maybe wages haven't matched inflation, and the rapid rise in interest rates has distorted affordability but that may be temporary for a few years.

The Forever Tenant

13:47 PM, 7th July 2023, About 8 months ago

It was an issue before the interest rises and i see only a considerable reduction in house prices allowing the average person to be able to purchase a property.

The issue at hand is not just the interest rates but something brought up in the article. That average house prices are now 8.8x the average income. That's the multiplier you need to get from a bank and no-one is going to give that to you.

Had house prices stayed anywhere near to the 4-5x income they used to be then things would be a lot rosier for homeowners, Landlords and tenants.

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