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The £64,000 question

Posted by Mike Carey on 18th April 2016
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Runaway house growth (although the market is cooling a little at the moment) and stagnant wages mean that ever fewer of us will be able to afford a home. By 2020, first time buyers in the UK will need a salary of £64,000 to be able to afford a home, a fifth more than what is needed today, at £52,000. The price of such a house is set to rise to £270,000 in five years’ time, according to Shelter, which carried out the research. The situation is worst in London first time buyers there will need earn £106,000 to afford the average first time buyer house, up from £80,000 today. This projection is based on the expectation, set out by Prof Paul Cheshire, professor of Economic Geography at the LSE, who argues that house prices will rise 23pc by 2020. The Office for Budget Responsibility has also projected a 26.4% rise in house prices by 2021. MW-CG608_pfbudg_20140603135409_MG.jpg House prices for first time buyers are rising at a higher rate than those bought by owner occupiers: figures from the Office for National Statistics show that homes that they bought were rising in price by 8pc nationally, compared to 7.6pc rise of all house prices. Campbell Robb, the chief executive of Shelter, said: “When house prices are increasing six times faster than the average wage, it’s no wonder people on ordinary incomes are being locked out of a home of their own. With the situation only set to get worse, Generation Rent will be forced to resign themselves to a life in expensive, unstable private renting, and wave goodbye to their dreams of a home to put down roots in. But the Government has the power to turn our housing crisis around, but only if they stop with schemes like Starter Homes which only help higher earners, and start investing in homes that people on ordinary incomes can actually afford to live in.”