House prices have sky rocketed in Oldham, Tameside and Bury, taking them from ‘easily affordable’ to ‘out of reach’ for buyers, according to a Trade Union Congress report.
A combination of soaring house prices, stagnating wages in the run-up to the crash and the longest real wage squeeze in over a century have left house prices more out of reach than ever before.
And whilst average house prices have yet to reach their pre-recession peak in many parts of the UK, falling real wages mean that homes have not become any easier to buy for local people.
Almost doubling in 17 years, the value of a home in Oldham was 2.73 times the annual salary but is now up at five times earnings.
Meanwhile Bury was at 2.90 but is up to 5.02 and Tameside is up to 5.07 from 2.84.
And Manchester residents are not the only ones suffering from this staggering decrease in the affordability of housing.
TUC General Secretary Frances O’Grady said: “London always comes out top when it comes to horror stories about ludicrously over-priced housing.
“But the toxic combination of rising property prices and falling real wages has meant that local housing affordability remains a huge problem for millions of people across the country.
“Houses and flats in traditionally affordable areas of the country – from Kirkless to Great Yarmouth and Plymouth to Oldham – are now out of reach for many local people.”
The dramatic fall in affordability of houses put prices in 84% of the country’s local authorities at more than five times the local salary.
The affordability ratio of five is particularly significant, says the TUC, as the Bank of England has recently instructed banks to limit the proportion of mortgages they offer that are more than 4.5 times applicants’ salaries.
Rising house prices, low wage growth and greater restrictions on lending mean it is set to get even harder for people to get a foot on the property ladder.
Mr O’Grady added: “We need an ambitious programme of home-building to get house prices back under control.
“At the same time, the growing number of people who have no hope or desire to buy a property any time soon but are still being clobbered by soaring rents need a better deal too.
“But housing affordability isn’t just about house prices, decent wages are just as important and there is a lot of ground to make up before we return to the kind of salaries that people were earning before the crash.”
All of the top five least affordable areas of the country are in London. The Royal Borough of Kensington and Chelsea top the list with average house prices more than 30 times the average local salary.
Elmbridge in Surrey is the least affordable area outside London with an affordability ratio of 14.3.
The study by the federation of national trade unions has shown a drop in the number of local authorities deemed ‘easily affordable’ from one in five in 1997 to just one today.
The one remaining area with ‘easily affordable’ housing in the UK is Copeland in the Lake District, where prices are at 2.87 times the local salary.
Image courtesy of BMiz, with thanks