Still in Crisis – 13 Worrying Facts About The UK Property Market

Still in Crisis – 13 Worrying Facts About The UK Property Market

1.   It is now so expensive to rent in London that it would be cheaper to commute everyday from Spain. Flying in from Madrid four days a week could save you £5,000 a year compared with renting a one-bedroom flat in Camden. (source)

2.   The cost of renting in London has increased 30% over the last four years. The average rent for a London flat is now £1,676 per month (£55 a night!)! (source)

3.   With this in mind, it is cheaper to live in a 4-star hotel in two-thirds of European capitals than it is to rent the average London flat! You could live year round in a hotel in Dublin, Rome, Paris or Brussels for the same cost. (source)

4.   Spiralling property prices have reduced home ownership in England to its lowest level since 1986. Back then, first time buyers could get a home for an average of £30,000; now the average cost of a home exceeds £200,000. (source)

5.   The rate people in the UK are able to buy their own homes is at the fourth lowest level in Europe. Only Denmark, Austria and Germany – countries where the renting is preferred – now have lower home-ownership rates. (source)

6.   At the same time, London is one of the most expensive places to rent in Europe – in countries like Germany and Holland renting is 50% cheaper than it is in the UK. (source)

7.   Rising house prices and rents mean that the average UK household now spends 29% of its monthly income on housing costs. Those in the private rental market fare even worse, spending 43% of their salaries. (source) Worse still, Londoners spend a staggering 60% of their gross earnings on renting a home – for those between 16-24, this increases to 88% of their income. (source) Whilst housing expenditure has increased over the past three decades, other living costs (e.g. food) have fallen over the same period. (source)

8.   London has the second most over-valued property market of any major city around the world. It is also the second-least affordable city in the world when factoring in increasing house prices and average earnings. (source)

9.   UK house prices have increased faster than most other countries: since 1980, UK house prices have increased by around 10 times, compared to around four times for the OECD and Euro area. Adjusted for inflation, UK house prices also have increased by more than any other OECD country, except New Zealand. (source)

10.   Alongside soaring house prices, real wages in the UK have fallen by over 10% in the years following the financial crisis – a decline matched only by Greece in the advanced Western economies. By early 2015, the average price of a house was five times the average annual wage (nine times in London!). By contrast, in 1997 a house cost little more than twice the average salary. (source)

11.   Across the UK we are currently building an average of 140,000 homes per year – but the UK population is growing at 1%, adding around 270,000 new households annually. This is on top of an existing housing shortage. We need to be building 350,000 new homes a year to keep up with population growth and tackle the existing shortage – this would mean building two cities the size of Bristol every year. (source)

12.   Is cost preventing us from building homes? No: building houses makes money. The cost of building a house is roughly half the price of the average house. (source)

13.   Is it a lack of land? Again, probably not. Only 1% of UK land is housing; of all the land in England only 10% is developed. Building 350,000 houses would only increase our housing stock by 1.3% per year, and would only involve building on only 0.01% of land annually. (source)

Written by Grace Waters

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