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Average wage needs to double to keep up with house prices


The average income in England would need to increase by more than double in order for the average earner to be able to afford their first home, according to research from the charity ‘Shelter’.

The research shows that wages have increased by around 50% since 1997, however, this pales in comparison to house prices which have increased by more than 200%.

Additionally the research also shows that if wages had kept pace with the rising cost of property, the average wage would be over £55,000, rather than £25,932. This means that the average earner would need a pay increase of more than £29,000 to make up the gap between stagnant wages and soaring property prices compared to 1997.

Those in the south have felt the effects of increasing property prices, especially in the London Borough of Hackney where the average income is £31,304. If wages had matched property inflations, the average wage in Hackney would have been £131,924, a gap of over £100,000.

These effects are mimicked in other areas of the country on a smaller scale, for example those in Watford or Brighton & Hove would need to earn an extra £47,000 to fill the gap, whereas average earners in Manchester would need their salaries to increase by over £34,000.

Furthermore, the research suggests that there isn’t a single area in England which has seen wage inflation stay in line with property inflation. In fact, the least affected is Burnley, where the average earner would need their salaries to increase by £10,000 to close the widening gap.

Shelter’s Chief Executive, Campbell Robb, claimed “the only solution is to build more affordable homes.”

He further went on to say: "Despite the fanfare surrounding Help to Buy, pumping money into mortgage guarantee schemes is not the solution. This further inflates prices by increasing demand for an already limited number of homes, and will only make things worse for the next generation of first time buyers.

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