Home buying 230% less affordable
Thursday, 11 Jan 2007 10:10

Buying a home is 230% more difficult than it was ten years ago

Home buying is 230 per cent less affordable than ten years, a new survey looking at housing market accessibility reveals.

The Royal Institution of Chartered Surveyors' (Rics) new index shows affordability worsened by 13.8 per cent in 2006, taking it to the low reached in 1980, when interest rates hit 17 per cent.

The report finds a first-time buyer couple now has to save up the equivalent of 81.8 per cent of their joint incomes - £32,784 for a typical first-time buyer home once deposits and stamp duty are combined.

Once on the property ladder, making mortgages repayments has also become less affordable, payments now taking up 22 per cent of joint incomes compared with 13.5 per cent ten years ago.

"Spiralling house prices have created a property glass ceiling for many first-time buyers," explained David Stubbs, Rics senior economist.

"With couples needing nearly 82 per cent of joint take-home income to fund the upfront buying costs of a typical home, the government's plans to create an inclusive society seem like a pipe dream.

"Unless the government builds more affordable housing, and raises the stamp duty threshold, many households will continue to struggle to access the housing market."

Mr Stubbs added affordability conditions would continue to worsen with the expected rises in interest rates in February, with the possibility of widespread repossessions in 2007.

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