Yesterday, the Office for National Statistics revealed that (excluding bonuses) wages in the UK rose by just 0.6% in the year to June. This rise was the slowest since records began in 2001 and as such, it is no surprise that in certain cases people are earning more from property than from their day jobs
In recent times, certain localities in the UK have experienced unprecedented property price rises and as such, many families have enjoyed financial benefits equivalent to an extra breadwinner in the family.
Those who purchased property before the financial crisis have enjoyed huge increases in the value of their properties but in certain areas of the country, even those who purchased at the height of the last house price boom, are also experiencing significant returns.
Between 1995 and 2007, average UK house prices trebled. This was followed by a period of stagnation as a result of the financial crisis in 2008. However recently a combination of renewed lender confidence, low interest rates, demand for housing stock and government schemes, such as Help to Buy, have led to a marked recovery, particularly in the South East.
It’s a fact that incomes have not grown as fast as house prices. Statistics from the Nationwide Building Society support this. During the 1980s, at the peak of the house price boom, the price of an average first time buyer’s home was less than four times their salary, today it is nearly five times earnings.
Indeed, according to the Land Registry, average house prices in London in June 2014 stood at £438,000 an increase of £62,000 in one year, a figure that is significantly higher than the average UK salary of £26,500.
House price growth however is on an area by area basis. In the UK there is no such thing as an average housing market.