Key Takeaways:
- UK citizens are finding it harder to avail affordable housing
- The ratio between house prices and household income is vast
- London is by far the most unaffordable place when it comes to housing
YEREVAN (CoinChapter.com) — Owning a home in the United Kingdom (UK) has become an ever more distant dream for a significant portion of the population, especially those with lower incomes. Recent official data paints a concerning picture. Affordable housing is now largely limited to 10% of the market for middle-income households.
Meanwhile, the affordability crisis has been steadily worsening. Many UK citizens are excluded from home ownership schemes due to the escalating eligibility criteria based on minimum income.
Despite the various affordable housing schemes in place by the UK Government and Local Authorities (LA), several youngsters still find it hard to avail of these. According to a recent BBC report, many renters with an annual income of £30,000 (around $38,460) are left out.
As the report indicates, the minimum income required for most schemes ranges from £35,000 ($44,870) to approximately £60,000 ($76,920).
While the Government has designed these schemes for people with limited income, it is bizarre that they are the ones who can’t avail of them.
No affordable housing for the middle class in the UK
According to the Office for National Statistics (ONS), middle-income households find it tough to afford a house with their current income.
The ONS provided estimates of the median household income and median house prices for each country in Great Britain. In 1999, a median-priced house in England cost 4.4 times the median income. Since then, house prices have soared while wages failed to keep pace after the global financial crisis.
The latest data compiled by the ONS for the financial year ending 31 March 2022 paints a dire picture.
In England, the average-price home was approximately £275,000 ($352,560), while the average income stood at around £33,000 (42,300), This resulted in a ratio of 8.4 between house prices and household income.
In Wales, the figures were slightly lower. An average-price home there cost around £185,000 ($237, 180), and an average income at approximately £29,000 ($37,200), leading to a ratio of 6.4.
In Scotland, meanwhile, the median house price was approximately £170,000 ($218,000), while the average income was around £32,200 ($41,300). This created a ratio of 5.3 between housing prices and income.
Finally, in Northern Ireland, an average-price home was estimated to be £151,000 (193,600). The average income there stood at approximately £29,600 ($37,950P), resulting in a ratio of 5.1.
UK citizens don’t earn enough to cope with housing prices
In England, only the households in the top 10% of income can afford an average home with an amount equivalent to less than five years of their income.
On the other hand, in Wales, this affordability extends to households in the top 30% of income, and in Scotland and Northern Ireland, it includes those in the top 40% of income.
This indicates that housing affordability varies across these regions. England has the highest threshold for affordability, followed by Wales, Scotland, and Northern Ireland.
Unsurprisingly, the unattainable housing market has led to a rise in adults living with their families. Since 2011, the number of adults living in their family homes in England and Wales has surged significantly.
In 2021, nearly 3.8 million families in England and Wales had adult children living with them. This is a 13.6% rise from the 2011 figures.
During the same period, there was a notable 14.7% increase in the total number of adult children residing with their parents. The figure rose from approximately 4.2 million in 2011 to around 4.9 million, according to the Office for National Statistics.
For those who do manage to move out, renting is often the only option. However, in many areas, the rental market is also becoming unaffordable, adding to the financial burden faced by citizens seeking stable housing.
UK PM Rishi Sunak and London Mayor Sadiq Khan are at loggerheads
By far, London has become the most unaffordable place to live when it comes to housing costs. According to the ONS, a low-income household in London will have to shed over 37 years of their income to afford a house.
The soaring prices in London have caused an open spat between PM Rishi Sunak and Mayor Sadiq Khan. During the announcement of his plan aimed at reducing home prices, Sunak pointed fingers at Khan, accusing him of failing to deliver the necessary number of homes, thereby exacerbating the challenges faced by Londoners in owning properties.
“Labour’s Sadiq Khan has failed to deliver the homes London needs, driving up prices and making it harder for families to get on the housing ladder. So I’m stepping in to boost house building and make home ownership a reality again for Londoners,”
Sunak remarked, according to the LiveMint.
Sadiq Khan swiftly responded to Sunak’s claims by suggesting that the Prime Minister’s Conservative party was trying to divert attention from other pressing issues, such as the ongoing mortgage crisis, by engaging in this argument.
Khan maintained that his City Hall had surpassed the government’s targets for affordable housing, emphasizing that they had taken significant steps towards constructing a record number of council-built homes.
Meanwhile, Tom Copley, Deputy Mayor of London for Housing, rubbished Sunak’s claims. He argued that over 23,000 new council homes have been completed or are under construction in London.
With the Tories and the Labor caught in a spat the dream of homeownership is slipping away for a growing number of UK citizens.
The rising minimum income requirements, coupled with soaring house prices and limited affordable housing schemes, have left countless middle-income households excluded from the property market.
