Kensington homes cost 16 times average wage
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Your support makes all the difference.In large swathes of Britain an average home now costs many times more than the average 3.38 times earnings that banks are willing to lend to buyers, according to new market research.
In the least affordable area, Kensington and Chelsea, an average home costs £753,000, 16 times the average local wage of £46,000, which is itself double national earnings. Homes in Westminster cost 12 times average earnings and in Camden, homes are 11 times the local wage, the study by CACI, a market research group, found.
The property market is soaring well beyond the reach of average earners in many areas of the country, such as the Cotswolds and Chichester, where homes cost nine times local wages.
Only in the most depressed areas and the further flung corners of the UK are average homes selling for less than the maximum multiple generally lent to people on average incomes.
Homes in Shetland are the most affordable in CACI's index, selling for an average of £108,000, 3.2 times the local wage. In Hull, they are 3.3 times the average wage.
This week a poll by the housing charity Shelter suggested that 6 per cent of households, more than one million nationally, have used credit cards to pay for their mortgage or rent in the past year. Its chief executive, Adam Sampson, said: "For many people trying to keep a roof over their head desperation is driving them to short-term, high-cost borrowing."
Amid the recent economic turbulence, the Government urged mortgage lenders to stop making irresponsible home loans to borrowers which could lead to an abrupt reversal in prices – a collapse. While that might help buyers in the short term, it would destabilise the economy and threaten employment. Alistair Darling, the Chancellor, told MPs yesterday: "Many people do expect the housing market to slow down. I do think lenders need to be realistic when they make an offer of a loan."
New figures show the house price boom is slowing. According to the latest survey from the Halifax today, prices rose by just 0.9 per cent in the three months to September. However the national figure masked a growing divergence between the North and South, with prices rising by 1.8 per cent in the South-east compared with a price fall of 2.1 per cent in the North. The average home in the South now costs £265,921 – 68 per cent more than the average home in the North.
Ian Thurman, head of location planning at CACI, said: "Although there are uncertainties about house price trends in the short term, longer-term affordability seems set to remain an issue for many."
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