17 Mar

First-time buyers penalised by property price increases

First-time buyers penalised by property price increases

If property prices had increased at the same rate as incomes, than first-time buyers would be paying around 40 per cent less to step on to the property ladder, claims new research.

Housing charity Shelter has concluded buyers would be paying £77,000 less for their first home because incomes have not increased at the same rate as housing prices.

Since 1969, the price of an average starter home has increased from £4,136 to £198,039. However, this is considerably more than the rise in incomes of first-time buyers over the same period, with household income increasing from £1,624 in 1969 to £47,574 in 2013.

If income and property prices had remained more in line the average starter home would cost £121,166, compared to the current £198,039.

Shelter's chief executive, Campbell Robb has highlighted the need for the government to look again at ways of ensuring people are able to afford to get on the property ladder.

"When wages and house prices are so out of sync that first-time buyers are having to pay tens of thousands of pounds more for a foot on the ladder, it's a clear sign that our housing market is out of control."

He added: "We need a big bold plan that will fix our broken house-building market for the long-term."

The government has launched a number of initiatives designed to help first-time buyers, including mortgage support schemes such as Help to Buy, which provides support to those with a five per cent deposit.

David Cameron recently pledged to increase the number of starter homes available to buyers and has lessened controls on brownfield commercial land to encourage more developers to build homes and increase the UK's housing stock.

According to Halifax, house prices in England and Wales fell by 0.3 per cent in February compared to the previous month. Although, prices remain 2.6 per cent higher than in the previous three months.ADNFCR-1222-ID-801780106-ADNFCR

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