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House prices increasing at twice the rate of average wage, says report

By tobymeyjes  |  Posted: March 09, 2014

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The housing shortage is pushing up private rents and house prices, according to the National Housing Federation

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The housing shortage in the South West is pushing private rents and house prices out of reach for local workers, according to a new report.

While the average wage rose by just 22% between 2002 and 2012, house prices have increased by more than twice as much (56%), according to the National Housing Federation.

The report, Home Truths 2013/14, blames the housing crisis on a shortage of affordable homes, with only 2,140 built in the West in 2012/13.

The average salary for the region sits at just £21,573, more than 11 times less than the average house cost of £241,550.

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Private rents increased by 35% over the same period, and are expected to rise a further 41% by 2020.

The report also showed that a gross annual income of £52,147 is needed for an 80% mortgage in the South West, with every new home built bringing in £77,314.

In the South West there has been a 108% increase in working people claiming housing benefit since 2009, and the third largest rise in housing benefit claims overall.

Jenny Allen, South West external affairs manager for the National Housing Federation, said: “High house prices, rising rents and low and stagnant wages across the South West region are not only making life extremely difficult for people living and working here, but they are also affecting employers and businesses and risk holding back economic growth.

“We need Local Enterprise Partnerships to work with local councils, housing associations and others to take a strategic lead on getting more homes built at the right price in the right places, which will help revitalise communities and create jobs.

“Local people also have an important role to play. Those who want more housing in the South West need to contact local councillors and say ‘Yes to Homes’.

“With more support, housing associations across the South West can be real catalysts for change for local communities. They are in it for the long term and can actively drive forward a balanced economic recovery.”

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14 comments

  • JullSan  |  March 29 2014, 12:33PM

    I am sure more projects of social housing are needed to provide houses for young and low-income families, with rising house costs less and less people are able to afford new home buying, more and more individuals choose for renting. Jull from http://tinyurl.com/o5onv8y

  • westwelsh  |  March 11 2014, 8:53PM

    Social housing in Kernow should be under local control, and local people prioritised over incommers.

    |   -16
  • b_mused  |  March 10 2014, 6:49PM

    greeneagle23 - Thanks for giving me the opportunity to explain this. A lot of the social housing I am thinking about would be 1 or 2 bedroom apartments (in very short supply at present) which could be in 3 or 4 storey blocks to minimise land take and cost £35-50k each. The estimate for HS2 is about £50 billion which would finance over 1 million homes. Land is a large proportion of housing costs and Councils are sitting on lots of it so instead of giving it to private developers (e.g. Plymouth Airport) they could get tenders in from building firms to construct to a required specification. The rental income (much from housing benefit) would then be returned to the local authorities instead of to private profits. As an added bonus, loads of proper jobs in the building industry would be created thus generating more income tax and making huge savings in welfare benefits. It is only a question of will and assessing priorities to find the initial investment but in due course the process would be self financing and recover enough for HS2. We are suffering from Thatchers dogma and lack of foresight - that is partly why waiting lists are so long. I do agree with your other points - too many young single mothers thinking that the rest of us owe them a living and pushing up housing demand even further.

    |   5
  • westwelsh  |  March 09 2014, 8:57PM

    We should have a moratorium on sales to those not already resident in Kernow, that would see prices fall to a reasonable level. Vote Mebyn Kernow for control over our country's housing stock.

    |   -39
  • josdave  |  March 09 2014, 8:44PM

    break got it right the continual rising of house prices only benefits estate agents who get a higher commission. Everybody else loses. Regardless if you get a higher price for your house if you move to an equivalent house you will lose money in estate agent fees and solicitors fees plus removals. You will only gain if you downsize. That most abused word "affordable" is often used but means nothing because if you've got the money anything is affordable.

    |   -5
  • greeneagle23  |  March 09 2014, 2:03PM

    @bmused just where do you think the money is coming from to build all these council houses. In this modern world it's user pays. Giving 17 yr old mum a two bed flat is all that is wrong with this country. How about contributing to society and being responsible for your own actions.

    |   8
  • greeneagle23  |  March 09 2014, 1:55PM

    @westwelsh I would hazard a guess it was the greedy Cornish selling their houses to the highest bidders that has caused the problem. You reap what you sow mate!

    |   11
  • hstmtu4000  |  March 09 2014, 9:30AM

    All regions of Britain including the south west are are now effectively becoming a "side show" to London's rapidly growing economic dominance both within Britain and increasingly as "the new capital of the world" as the following eye opening BBC2 documentary (Part 1) screened last Monday entitled rather aptly "Mind the Gap: London v the Rest" point out. Part 2 is tomorrow night if your interested. http://tinyurl.com/o8s4px3 Any region in the 21st century that is a long way from London with poor transport links is therefore particularly vulnerable. Say no more now.

  • b_mused  |  March 08 2014, 10:01PM

    @break - agree with your comments. 'Affordable housing' is meaningless to people with little money and you are right that most of the 57000 ? houses in Cornwall will be bought by people moving in from elsewhere or second home owners or investors. It's an absolute mess.

    |   7
  • b_mused  |  March 08 2014, 9:55PM

    If the Government was seriously worried about housing, it would finance the building of loads of council / social housing. This would knock the bottom out of the private 'buy to rent' market and leads to reduced house prices all round. Pity that the Tories are obsessed by property ownership.

    |   11

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