UK’s Toxic Housing Mix

Asking prices for houses in the UK are starting to fall at a time when first time buyers in the UK continue to struggle to get on the ladder.

The average house price in the UK has now moved lower by around £25k according to property website Zoopla, but are still nearly 8 times the average wage, which is around 30K per year.

Schemes like help-to-buy require a 5% deposit which would equate to around £11k for a house at the national average of £223,807 and in London, it would mean close to double that at £22k minus any fees as the average asking price is £481k here.

Let us look at one scenario: a couple earning a combined wage of £60k per year (£3946 after tax p/m) would need to put aside £1500 per month for rent in the suburbs of London. Courtesy of the Sterling selloff, CPI is now at 3.1% in the UK, so cost of living has naturally increased.

According to Numbeo, the average cost of living for a single person is £757 per month not including rent so that’s £1514 for a couple, minus that of the total and including rent makes for £923 per month in disposable income.

In this case, the couple have no children, so add in the cost of a child, childcare, etc and it is now next to nothing.

So with the remaining £923 per month left how long would it take to save enough for a deposit and fees in London?

Calculator please… 3.5 years minimum.

Adding to this, lenders in the UK only grant mortgages to couples if their salary amounts to 5 times the property value so a £60k income would get you a property to the value of £300k, virtually impossible in London.

Clearly, something has to and will change; rents and the cost of living are too high for people to save the amount needed for deposits, and fees and lenders can’t break rules to lend to the average couple.

But as long as people can’t buy, rents will remain high and legislation for change seems impossible to pass as 39% of Conservative MPs are landlords themselves, renting out at least one property.