Property Inflation Outstrips Wages
The Law Of... rising house pricesA recent report from the Office for National Statistics (ONS) has shown that while house prices continue to rise well above the level of inflation, wage increases are floundering in their wake.
Lisa Gibbs, Conveyancing Manager with Simpson Millar, takes a look at the figures and what it means for home buyers in the UK.
House Prices Race Ahead, Wages StumbleBuying a home of your own
isn't the rite of passage it once was, with the rising cost of living, along with the toxic combination of inflation-busting house prices and stagnating wages all conspiring to keep many off the first rung of the property ladder.
According to ONS statistics
, the average property price in July of this year was almost £217,000, an increase of £17,000 on July 2015. That's a typical rise of 7.8%. In contrast, average weekly earnings for the same month, as revealed in another set of ONS figures
, have only risen 2.2% on last year.
Leading the Charge
This continued growth in property value is strongest in England, with the average asking price now at a hefty £232,885 - a 9.1% increase on the previous year. Leading the charge is London, where the average home is now valued at £484,716 (up 12.3% on last year), over £170,000 more than the average price in the South East, the region ranked second on the list. Incidentally, that difference is a figure higher than the average property prices for Scotland, Wales, Yorkshire and The Humber.
House prices by country are as follows:
- England – £232,885 (9.1% annual change)
- Wales – £144,828 (4.0% annual change)
- Scotland – £143,711 (3.4% annual change)
- Northern Ireland – £123,241 (7.8% annual change)
With wage rises close to stagnation when compared to the inflated value of property, how can buyers cope with the rising costs?
Lisa comments:"The failure of house prices to stay in line with the average wage has created a situation in the UK where first time buyers are unable to afford the deposit needed to secure the home of their dreams, a subject we've discussed before.""But it's not just first time buyers the deficit between wage increases and property inflation affects. Those looking to upsize or move to a different area can also find themselves priced out of the market due to the ever-increasing cost of housing.""With prices so high and the extra costs such as stamp duty and land registry fees to contend with, buyers need all the help they can get, which is why, at Simpson Millar, we offer affordable options.""Our fixed fee charges offer an expert service at a cost-effective price, ensuring solicitor expenditure isn't an obstacle to your move."