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Are houses in England not affordable anymore?

According to the Office for National Statistics (ONS), the average house price in England has reached its highest level with 7.9% in 2017 for those who earn the mean salary in the country. This represents a significant growth from 2002 when house prices were almost three per cent points lower (5.1%).

In the report of the House of Commons it is warned that starter houses for families (new-build homes sold at a minimum of 20% of the market price) will be unaffordable in over half (58%) of local authorities within the country by 2020. The situation seems to be even worse for singles. Those on low or average wage won’t be able to afford a starter home in the majority of local authorities, according to Shelter.

The then Minister for Housing and Planning, Brandon Lewis, criticised the results of this research and argued that the data from Shelter was based on the median price in each local authority and pointed out that “If [first-time buyers] were to buy in the lower quartile of the first-time buyer market, outside of London, up to 64% of households currently renting privately would be able to secure a mortgage on a typical starter home, compared with just 50% who could buy a similar property now at full market value”.

Renting most affordable in the North

Despite the continuous growth of the rent prices in England, the North East has been shown to be “the most affordable” area to rent within the country, just after Copeland. Looking at the median income, people in the North East spend 26% of their income on rent. The percentage is considerably lower compared to London (47%) or the South East (38%) among which are the least affordable regions for renting in England.

Graph affordability of social rent per region in England, House of Commons, 2018

To read the full report click here

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