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Homebuying 'out of reach' for many



couple moving houseThe cost of buying a home in England has increased by £114,749 in the space of a decade, while the average salary continues to lag behind.

According to research by the National Housing Federation, the typical price of a house was £121,769 in 2001, but had increased by 94% to around £236,518 just 10 years later.

Meanwhile, wages rose by 29% from £16,557 to £21,330 during the same period, making buying a home increasingly unaffordable.

This has led to a greater ratio between the average house price and salary. In 2001, the ratio was 7.4 across England, but by 2011 it had risen to 11.1.

Mortgages

In 2001, the deposit for a typical 90% mortgage was £12,177, about nine months of an average salary.

However, by 2011 the deposit needed for a typical 75% mortgage was £59,129, almost three years of an average salary.

Many lenders have tightened their borrowing criteria amid all the economic uncertainty, meaning those with smaller deposits are struggling to take out a mortgage.

Consequently, many families are being forced into the rental market where "fierce competition" has seen average rents hit a new high of £725 a month in July in England and Wales, according to a separate study from lettings network LSL Property Services.

"These shocking figures show that it is getting increasingly harder for millions of people to buy a home of their own in the current climate," said David Orr, chief executive of the National Housing Federation.

"With the gap between income and house prices growing ever wider, people can often feel like they have to win the lottery to be able to buy in their local area.

"A shortage of homes means the price to buy them is being pushed ever higher by the market, and out of reach of millions of hard- working families."

Costs to consider

Buying a house can be an expensive business, and it is a decision which shouldn't be taken lightly.

You'll need to make sure you have the money for upfront costs on top of the money you spend on your deposit and mortgage repayments going forward.

After weighing up the costs involved you may decide that now isn't the right time for you to be buy a house. If so, renting may be a better alternative for you and your family.






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