Young "priced out of housing market"
Friday, 05 Oct 2007 13:56
It is cheaper to rent than buy a house, Hometrack says
Almost a quarter of young working households in the UK have been priced out of the housing market, new research has claimed.
Property intelligence firm Hometrack claims that the average house in the UK is now worth more than five times the average first-time buyer's income.
A report based on Hometrack's house price data claims that 24.3 per cent of young households across the country have little chance of getting a foot on the housing ladder.
It says that spiralling
house prices have caused renting to become the most affordable option for young people seeking a place of their own.
Hometrack claims that while residential property prices have tripled since 1994, private sector rents have increased in line with earnings. As a result private rents represented less than two-thirds of the level of house purchase costs in England and Wales in 2006.
The report, Can't buy: Can rent – The affordability of private housing in Great Britain, was written by an academic at the University of York using Hometrack data on house prices and rental levels.
It shows that the region with the highest house price to income ratio is London, with the city's affluent borough of Kensington and Chelsea also identified as the least affordable authority for potential homebuyers.
The study identified the south-west as the region with the greatest proportion of young households priced out of the market, with 34 per cent unable to afford to buy a home.
In London 31.5 per cent of young households cannot afford to get on the property ladder, while 30.2 per cent are unable to do so in the south-east.
Scotland is the most affordable area to buy a home, with just 15.8 per cent of young working households there priced out of the market. But Hometrack warned that in the least affordable areas more than 50 per cent of potential buyers were unable to afford a first home.
Commenting on the study's findings, Hometrack's director of research Richard Donnell said: "The affordability problems highlighted in this research are largely a result of an unbalanced and inflexible supply of homes which has led to high entry costs for housing.
"While the government has recently set out new targets for house building this research highlights the importance of developing the right type of housing in the right forms of tenure," he added.