- 02
- Nov
Two set of figures out this week show that an increasing amount of first time buyers are facing a difficult path ahead with the gap between earnings and house prices continuing to grow.
Mortgage repayments have consumed the greatest proportion of take home pay for the last 17 years. The lowest earners as well as first time buyer couples now typically need to use their joint salaries in order to be able to afford the repayments on a home loan according to research out by the Royal Institution of Chartered Surveyors (Rics).
A separate study out this month from the TUC also shows that the average price of a house in the UK has gone up more than four times faster than that of the wage of the average UK employee over the past 10 years.
The Rics study found that in order to cover the stamp duty, cost of a deposit and legal fees, a first time buyer will typically need to save £25,600. A couple in the lowest earning bracket will earn roughly £25,899 a year between them which is only £299 more than the minimum required to purchase a house.
Some areas of the UK are better for affordability than others. In the North-West upfront buying costs make up 72.9% of the average couple’s joint income, but in other areas there is a very different story.
London which has been the driving force behind massive house price inflation also has the worst affordability issues with the average upfront buying cost in the area of 112.1% of joint take home pay. For these people, even getting an interest-only loan on a property seems an impossible dream.
