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Assetsure News 8th October 2007
House Price at Least
Affordable for 15 years
UK house prices are that their least affordable since before the 1992
house prices crash. At the present moment, one in four households are
unable to afford to buy their own home. Worryingly, most new home
buyers now need five times their annual salary to be able to afford to
buy a home. Home track, a company that supplies housing data said that
the ratio of house price to income has now reached unprecedented
levels. In at least 40 areas, to buy a house you need more than 5
times annual earnings and in the whole of the United Kingdom, there
are less than 19 areas where a property can be purchased for less than
the more traditional three times earnings.
As many people have borrowed money at high multiples banking on the
fact that interest rates will stay at an affordable level, there is
real chance that some homeowners are facing hardship in the coming
months. Some, have a mortgage on a fixed rate basis, but when this
ends, what then ?, money markets are currently in turmoil , the amount
of funds available as a mortgage or
re-mortgage is not as high as it was.
Certainly in you are applying for a mortgage in the coming few months,
it will not be as simple as it has been in the last few years to
obtain funds ant sensible levels.
Other interesting statistics recently released show that the North
South prosperity gap is reducing with house prices, earnings and in
fact employment rising faster in the north of England. The average
full time earnings have rising by 22% in the northern regions in the
last five years whilst in the south the figure is 18%. Employment is
rising at almost double of that being achieved in the South.
Homeowners too have seen some staggering increases in house prices, up
almost 97 % in 5 years against a more modest 52% in the South.
However, it can be argued that house prices in the south where already
at a respectable level and property prices in the north were merely
catching up. It is known that many people particularly the young first
time buyers have had to migrate to more affordable parts of the
country to buy a first home and of course, with them they take their
skills and labour which is benefiting the economy in the North.
Although the average wage in the South is some £6000 higher than in
the North, after taxation and national insurance, monies available to
put to towards a mortgage on a property that is substantially more
expensive don't travel too far. People are demanding cheaper homes and
at the present moment, the amount of disposable income is also running
at an all time high. It follows that companies are going to wish to
relocate in to areas that key workers can afford to live and have a
comfortable lifestyle and work done in the last twenty years to
improve the infrastructure of many Northern Towns, means they are
becoming more desirable and affordable than many of their southern
counterparts.
House prices at record levels and the recent introduction of the Home
Information pack have also resulted in the steep decline recently of
three bedroom houses coming on to the market. The drop is in the
region of 37% amongst properties that require a home information pack.
Many homeowners are being put off by the cost of moving and most are
worried that property prices are about to take a dip. Home Information
packs were designed to speed up the selling process but if anything
this ill-conceived idea seems to helping a market already in trouble
stagnate even more. The developing trend amongst homeowners is to sit
tight and wait and see what happens. no one wants to spend money on
fees moving to a bigger home only to see interest rates rise again,
property prices slip and the spectre of negative equity and all the
associated problems become an issue.
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Copyright Assetsure Limited 2007
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