3.8m private renters are unable to afford the average first home, new analysis from PricedOut finds today.
The figure includes 1.26m private renters who have been priced out of home ownership by rampant house price inflation and stagnant wages since 2010.
A household would require an income of £51,250 to afford the average first home of £205,000, but HMRC figures show that 69% of dual income households earn less than this - the equivalent of 3.76m private renters who pay income tax.
In 2010, the average first home stood at £155,000 – affordable to households earning £38,750 or more, but still out of reach for 2.50m of income tax-paying private renters – or 54% of the total.
The government launched the Help to Buy scheme in March 2013 and since then the price of the average first home has risen by 14%. A total of 70,000 first homes have been bought under both forms of the scheme. Assuming two people for each household, the analysis shows that for each of the 140,000 beneficiaries of Help to Buy, nine people have had their aspirations destroyed by rising prices under the coalition government.
Duncan Stott, Director of PricedOut, said:
“The Coalition claimed that it supports first-time buyers, but it has presided over a massive corrosion of their aspirations. By encouraging house prices to rise and completely failing to deliver the homes needed to meet demand, more than a million people now have the outgoing government to blame for being denied the chance of a home of their own.
“Throwing money at buyers with initiatives like Help to Buy is dangerously counterproductive. If the next government is serious about reviving home ownership, its top priority must be to set about building enough homes to end house price inflation, otherwise more and more people will become stuck in a lifetime of renting.”
Notes to editors
PricedOut (www.pricedout.org.uk) represents the millions of people who would like to buy their own home but cannot buy because of high house prices and high rents. The campaign is independent of any political party and supports initiatives to increase the supply of good quality housing in the priciest areas of the UK.
The PricedOut Index uses the HMRC’s percentile breakdown of UK taxpayer incomes, the English Housing Survey’s income profile of private renters, and the Office for National Statistics’ latest House Price Index to work out how many people could afford the average first home, based on the assumption that a home is affordable if it is no more than 4 times household income.
|Month||Average first-time buyer house price||Income percentage that can no longer afford to buy||Joint income||Number of renters in percentile and below||Top up to account for rest of percentile||Total priced out||Change in total priced out since 2010||% priced out|
Latest available data
The full methodology can be found in PricedOut’s original report.