Average earners priced out

Average earners priced out

Just 2.5% of homes for sale in London are affordable for average earners.

London’s leading housing associations are calling for more investment in low cost home ownership as modelling reveals fewer than 3,000 properties for sale across the whole of London are affordable to single people on median incomes using the Help to Buy scheme

The Help to Buy equity loan initiative is available to buyers wishing to purchase a new build property worth up to £600,000.  Modelling undertaken by g15, representing London’s largest housing associations, shows that single people with an average income of £26,499 could only afford a property worth £125,000 in the capital. This is based on modelling affordability against median incomes, an equity loan of up to 20%, a 5% purchaser deposit and standard mortgage lender requirements.

Between January and April 2013, just 2,963 (2.5%) of properties advertised in London across the main property portals would be within the reach of single people on this basis.

The picture is just as bleak for households which have a median income in London of £33,308. Their pricing point is £135,000 and just 4,176 (3.5%) of properties for sale over the same timeframe could have been purchased.

Nationally, the picture increases to 10% of all properties for singles, and 16% of all properties for households.

The g15 is now calling on the Government to focus more investment on Low Cost Home Ownership schemes. The £3.5 billion invested in Help to Buy, for example, could deliver 175,000 affordable homes and create £19 billion of gross value added to the economy* (see note 1).

Keith Exford, Chair of the g15 and Chief Executive of Affinity Sutton housing association, said: “We welcome any measures which boost the housing market, but these figures show that despite recent Government initiatives, people on average incomes are simply unable to buy a home in London, the highest area of demand in the country.

“Even the few properties that are affordable for people on average pay rates tend to be the most undesirable, such as flats over commercial premises, properties in poor repair and flats with short leases.

“The g15 is urging the Government to divert some of the Help to Buy resources to Low Cost Home Ownership schemes. This will enable housing associations and other providers to stimulate the economy and create jobs by building more good quality homes that are affordable to people on average incomes.”

 

Notes to editors

1.    Data taken from National Housing Federation Budget briefing 2013

2.    Single income based on median incomes for 2012 taken from the Annual Survey of Hours and Earnings (ASHE), Office for National Statistics

3.    Household income (all households including couples) based on median incomes taken from CACI paycheck income data for 2012

4.    Minimum pricing point based on 20% equity loan, 5% deposit and mortgage multiples of 3.5x single and 3x household

5.    Property data provided by Hometrack and vizihomes.co.uk covering all properties listed on the market from January 2013 to 1st April 2013 – drawn from all major property portals and selected estate agents.