Last Updated: 04/03/2016 10:56:01 Tags: Income-Gap-For-First-Time-Buyers-Increases
The continuous growth in the property prices in the UK looks as though it is going to continue, as demand outstrips supply. Which has resulted in the gap between the average income and the pay of people currently renting and wanting to buy their first time property has reached a post-recession high according to the ONS, Office of National Statistics and the Council for Mortgage lenders - who state that the average income a would-be-buyer would need to support a first time buyer mortgage is £38,977, which is £11,332 higher than the average salary which stands at £27,645.
This is the largest gap we have seen since the recession – which means the that unless there is a dramatic change in the house prices or the system, we will continue to see the ‘generation rent’ growing in the UK. This gap is attributed to tighter mortgage lending criteria, rising prices, which has made it harder for first time buyers to get onto the property ladder, even with the help of family members and government incentives. If we look back at the year 2000, the gap between the average salary to support a first time mortgage was only £3,170 and £7,505 in 2011.
In London prices have soared over the past ten years which has meant that in order for a first time buyer to purchase a property in the Capital they would need to have a salary of £58,500 or 65% more than the UK average wage.
Overall this data indicates that the gap between those who own a property and those who don’t will continue to grow, as the rate of wage increase will not be able to compete with rising property prices – which will mean that lettings industry will remain buoyant for the foreseeable future.
Source: Letting Agents Today