Hackney wages would need to be four times higher to keep pace with house price rises

 
Price hike: London's values soared by 18 per cent
Simon Read21 February 2014

Workers in Hackney would need to earn four times as much as they do now for their wages to have kept pace with house price inflation over the past 15 years.

Analysis by housing charity Shelter published today has revealed that the average UK wage would now be more than £55,000 rather than the official £25,932, if pay had kept pace with property.

The gap between wages and property prices is widening as salaries remain static and home values soar.

In Hackney the average wage stands at £31,304 in Hackney, but if wages had matched property inflation, it would be at £131,924.

In Westminster the gap climbs to £105,375, but workers outside London have also been hit by the double-whammy of effective pay freezes and soaring home prices.

People on average wages in Watford and Brighton & Hove would need an extra £47,000 each year to keep up with local house price inflation, while those in Manchester would need to earn £34,000 more.

Average earners across the country would need a £29,000 pay increase to be as well off in relation to property prices as they were in 1997.

Shelter’s research suggests that there is not a single area in the country where wage and house price inflation have remained aligned.

Burnley has the smallest gap, but £10,000 would still need to be added onto the average salary to put it in line with the rise in house prices.

Campbell Robb, Shelter’s chief, said: “When you’d need to more than double your salary just to keep up with rising house prices, it is no surprise that the dream of a home of their own is slipping further out of reach for a generation.”

Soaring house prices have left people being forced to take out larger mortgages with the average first-time buyer loan climbing 11.4 per cent in 2013 to reach £122,040.

Meanwhile official figures have revealed that more than 3.3m 20-to-34-year-olds were living with their parents last year in the UK.

“Politicians need to start meeting people halfway by committing to bold solutions that will get more affordable homes built,” said Mr Robb. “Otherwise future generations will find themselves priced out of a stable home, however hard they work or save.”

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