Property
Prices Through The Roof
Housing in the South East region is notoriously expensive. But do the costs weigh up to their worth? Where is the housing market headed and do government initiatives actually help, or just worsen the situation? Predicting the housing market can be a tricky business. According Focus to a recent – and fairly depressing statement from the Liberal Democrats, the average property price in the UK will reach £650,000 within a decade. This is a dismal view for the future, especially with many first time buyers struggling to even make that first step onto the property ladder, let alone climb it. The number of first time buyers has reduced substantially in the past decade, impacting largely on the age of current homeowners. In 1991, 67% of the 25 to 34 age group were homeowners. By 2011/12, this had declined to 43%. There were also reductions in home ownership over the same period for the 16 to 24 age group (from 36% to 10%) and for the 35 to 44 age group (from 78% to 64%). By contrast, home ownership has increased among older age groups. A likely contributing factor to the decline in numbers of first time buyers is the rise in the value of deposits paid to secure a mortgage. For first time buyers, the average deposit as a percentage of purchase price increased by almost 10 percentage points between 1988 and 2013, standing at 22% of the price of the house. Year on year, we see this trend
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develop. In November 2015, prices paid by first-time buyers were 7.4% higher on average than in November 2014 and the gap between wages and living costs seems to also be growing. Nationwide data shows that the earnings-house-price ratio in the final quarter of 1995 was 2.1 times earnings. In the final quarter of 2015, this ratio had reached 5.2 times. To make matters worse for London buyers, by the end of 2015 the ratio in the capital had become 10.1 times average wages, compared to 2.7 times earnings for firsttime buyers in 1995. Clive Janes, Owner of CRJ Lettings in Chichester, has seen this trend within the area in particular: “The growing anomaly between house prices and salaries could be the reason why the number of people renting privately in Chichester increased a whopping 51% between 2001 and 2011. Even with this increase, it seems there is room for further growth as the number of householders renting privately (12.8%) in Chichester is lower than the national average of 15%.” “With Chichester’s average salary being £25,739 (less than the U.K’s £26,500 average salary) the ‘average’ worker will find it hard to afford the ‘average’ property in Chichester (currently valued at £390,411). Making this even more difficult is the fact that the average property in Chichester has risen 8.6% in the past 12
months, whilst salaries nationally have increased just 3.4% in the private sector.” London and the South East see some of the highest property prices in the country, and the costs are ever-building. According to the Office for National Statistics, in Brighton, the average asking price on detached houses has increased by 51% since September 2006, with semi-detached houses increasing by 52% and terraced housing by 78%. Detached houses in Eastbourne are up +41%, with semi detached up 26% and terraced houses up 67% whilst average asking prices for terraced houses in Lewes since September 2006 are now up by a whopping 95% - nearly matching the average house prices in Brighton (a notoriously expensive area to buy and