Home ownership in Britain at its lowest level in 30 years as gap between house prices and earnings grows
06-29-2017
House prices rose again in June after a fall in May. Figures from the Nationwide building society show an average monthly rise across the UK of 1.1%.
But the gap between house prices and pay continues to grow, with the price of the average house now more than six times average earnings.
Bank of England Deputy Governor Jon Cunliffe, who three years ago warned that the housing market was the single biggest risk to the British economy, told ITV News that repossessions are low and levels of mortgage debt "look more sustainable".
But he also warned that if property prices carry on rising faster than pay then levels of home ownership are likely to continue to fall.
According to the Nationwide, house prices across the UK rose 3.1 percent in the year to May. Pay has consistently risen more slowly over the past eight years, with the average pay rise just 1.7%.
Mr Cunliffe said: "We're building half the houses now that we built 50 years ago.
"And because we've got this imbalance between the supply of housing in certain places and the demand for housing, that's what creates the underlying pressure for house prices.
"The big worry is that, as house prices go up relative to what people are earning, they have to take larger and larger mortgages."
Home ownership in Britain is at its lowest level in 30 years, with many people being forced to rent, and Mr Cunliffe believes it's likely to fall further.
"In 1997 a first time buyer paid £50,000 on average across the country for a house. That's now £200,000. The deposit was £5000, that's now £30,000."
The regulation introduced by the Bank of England to build a house market on sustainable mortgage lending has also made it harder for some younger buyers to buy.
Estate agent Emma Browell told ITV News: "From my experience, if first time buyers aren't either having inheritance behind them or help from parents it's more difficult if not impossible to get on the ladder."