Couples on Average Wages Struggle to Buy Homes

by Mark Johnston

As a child everyone is brought up to believe that when you grow up you buy a home. However in the current climate a generation is being frozen out of owning a home, due to property prices and high deposits, amongst other things.

David Stubbs, senior economist at the Royal Institute of Chartered Surveyors (RICS), said this situation was likely to worsen, adding “access to the housing market has deteriorated as the credit crunch and now the euro zone crisis takes hold of the mortgage lending sector”.

Gary Turner, operations manager at south Essex homeless charity, the Homeless Action Resource Project, said “people come to us struggling to get a deposit together for a month or two for a flat, let alone saving up for a deposit for a mortgage2.

New figures have suggested that couples on average earnings now have to set aside at least two thirds of their income to cover the cost of buying a home.

So for example, couples with a combined take home pay of £27,500 or less, would have to save more than a years salary to cover a deposit, stamp duty and solicitors fees on the average first home. This is according to figures from the Royal Institute of Chartered Surveyors (RICS).

A decade ago, couples on average earnings would have had to set aside just a fifth of their joint income to cover the costs of buying a home.

Some experts believe that first time buyers will not therefore sacrifice anything to get on to the ladder, but other experts feel they should not have to sacrifice everything and then have no money left each week once all the bills and mortgage are paid, just to have a roof over their heads.

All this comes at a time when it has emerged that at least 100,000 households ‘rake’ in more than the average wage in benefits every year. They collect around £30,899 before tax, whilst many workers can only aspire to an average wage of £23,422.

Matthew Sinclair, research director at the taxpayers Alliance, said “hardworking taxpayers will be shocked to learn that tens of thousands of claimants are getting more than the average annual wage in benefits”.

Employment minister, Chris Grayling, said “when thousands of people are earning more on benefits than hard working families struggling to get by there must be something wrong”.

29% of first time buyers have said that finding a suitable property to buy is a major concern.

A lack of ‘first time sellers’ is also severely limiting the availability of affordable homes for first time buyers.

Property website Rightmove.co.uk found that many home owners in their first property, who in normal times would be moving on, can not afford to due to a combination of negative equity, lack of confidence to stretch their finances and also difficulty in finding a suitable property to upgrade to.

This scenario is therefore leaving first time buyers unable to benefit from the record low mortgage rates currently available.



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