Wages are failing to keep up with soaring house prices, leaving homes less affordable than at any point in recent memory.
Data from the Office for National Statistics shows that the average house price reached £292,000 in July, up from £253,000 a year earlier (an increase of 15 per cent). Nominal wages have only risen by 5.7 per cent in that time, leaving the average house price equivalent to more than nine years of average earnings for the first time since comparable records began in 2005.
In 1992 the average house in the UK cost just £62,000, equivalent to just over three years of the average salary at the time. By 2020 house prices had risen to £281,000, an increase of 351 per cent, while wages had risen by just 55 per cent.
Prices for first-time buyers have risen even faster, increasing by 368 per cent over the same period, putting home ownership further out of reach for younger generations. This is reflected in the wages on which people are able to buy their first home. In 1992 the average first-time buyer had an income of £18,000, or 11 per cent less than the nationwide median income. By 2020 first-time buyers had an average income more than 58 per cent above the national average.
Liz Truss, the Prime Minister, is expected to abandon the government’s pledge to build 300,000 new homes a year; she told a Conservative leadership hustings in July that she would “abolish the top-down Soviet housing targets that we have across our country”. Truss has suggested that she would instead seek to increase housing stock through tax cuts and deregulation.