House price rises beat a salary
The study, compiled by the Centre for Economics and Business Research, showed that house prices increased by 12 per cent – equivalent to £29,339 – over the last twelve months, while the average worker took home earnings of £27,271. More than 60 per cent of the working population earned less than the average home in the last 12 months.
The study shows that increasing in value of the average home now outpaces the earnings of a number of key professions, and significantly exceed the starting salaries of a junior hospital doctor (£22,636), a graduate nurse (£21,388), a teacher (£22,023), a police officer (£23,317) and a solider (£17,945).
John Willcock, Head of Mortgages at Post Office said: “Property prices have soared over the last year, following a long period of recovery – and are set to increase further over the next five years. Whilst this is good news for those that already own their home, our study highlights the struggle that buyers and movers looking to climb the property ladder face, especially in getting on that all-important first rung.”
“Homeowners in the East, South East and London saw their earnings outclassed the most – with properties in each region earning £34,002, £35,188, and £80,462 respectively. Houses in the nation’s capital earned £80,462 – almost twice as much as the average London salary (£41,095). They earn more than the average earnings of a fully qualified doctor in the UK (£70,648).”
Willcock says that the group forecasts a slight contraction of 0.8 per cent in 2015, as the market responds to the Mortgage Market Review (MMR) guidance. The MMR is likely to bring in longer transaction times and more rigorous criteria, meaning the overall process of buying and moving takes longer.