Generation locked out of broken market in South East as average property price rises to over £284,00

Average property now costs 12.4 times the average income in the South East.

7 December 2011

An entire generation has been locked out of a broken housing market in the South East with the average property costing £284,379, according to a report released on Thursday by the National Housing Federation. The average worker would have to save every penny from their pre-tax salary for over three years just to raise the deposit of more than £70,000.

‘Home Truths South East’ shows that the average property now costs 12.4 times the average income of £22,870, with the average property rising £30,000 over the previous year. A salary of £60,938 is needed to obtain a 75% mortgage at 3.5 times income.

The Federation, which represents England’s housing associations, warns of a unique triple whammy hitting first-time buyers and low-to-middle income earners: steep rises in the private rental sector, huge social housing waiting lists and sustained high house prices. The fundamental problem remains a chronic under-supply of homes. Despite the economic turbulence, house prices in the South East are still 22% higher than 5 years ago and 100% higher than 10 years ago.

The Federation’s Warren Finney said: 'The South East has become unaffordable for ordinary hardworking people who have no realistic chance of buying their own house, triggering even greater demand for good social housing or a desperate search for a home in the more expensive private rented sector.'

Even buying a lower value home – a property in the bottom 25% of prices – for £167,500 requires an average salary of £35,892 to obtain a 75% mortgage. The deposit is £42,000.

Across the South East, average house prices in counties and unitary authorities are:

County

Average house price

Times average local income

Windsor and Maidenhead

£421, 233

14.4

Surrey

£395,543

14.7

Buckinghamshire

£363,689

14.0

Wokingham UA

£312,545

11.5

Oxfordshire

£311,944

13.8

West Berkshire UA

£302,530

12.3

Brighton and Hove UA

£277,969

12.9

Bracknell Forest UA

£274,303

10.4

West Sussex

£271,725

13.2

Hampshire

£267,138

11.9

East Sussex

£248,205

12.3

Kent

£242,575

11.1

Reading UA

£228,106

9.3

Milton Keynes UA

£206,604

9.1

Slough UA

£206,203

9.2

Isle of Wight UA

£205,306

11.4

Southampton UA

£178,557

8.8

Medway UA

£173,917

7.7

Portsmouth UA

£173,080

8.6

South East Regional Committee chair Geeta Nanda said: 'The figures get worse every year but the solutions remain as clear as ever. There is an urgent need for investment in affordable housing. As a chief executive I know that housing associations are here to play a vital role in providing safe and decent accommodation.'

Affordability remains a huge problem across the region. Looking at price to income ratios, the average price property in Chichester is almost 20 times the average local income. The five most unaffordable places are:

Income to price ratio

Average price

Chichester, West Sussex

19.4

(£349,445)

Elmbridge, Surrey

19.1

(£562,913)

South Bucks, Buckinghamshire

18.9

(£536,199)

Sevenoaks, Kent

17.0

(£389,595)

South Oxfordshire, Oxfordshire

16.7

(£368,746)

And the five most 'affordable' areas are:

Income to price ratio

Average price

Medway UA

7.7

(£173,917)

Swale, Kent

8.1

(£181,359)

Hastings, East Sussex

8.5

(£163,152)

Portsmouth UA

8.6

(£173,080)

Southampton UA

8.8

(£178,557)

Finney said: 'Ministers should make a renewed commitment to building the homes we need and identify housing as a key driver for economic activity. The only answer is more affordable homes. This report shows we need a reformed planning system that supports the building of affordable homes and the use of suitable surplus public land to build on. The need for new affordable family housing has never been greater.'

Launched at the House of Commons, Home Truths South East also showed:

  • Around 215,373 households are on the social housing waiting list with 80,000 households living in overcrowded conditions, causing great misery at a time when housing benefits are being slashed and unrealistic caps imposed
  • More than 3,500 households lived in temporary accommodation in the South East at the end of 2010
  • Over 4,500 households were accepted as homeless by local councils in 2010/11, up 17% from the previous year and among the biggest increases in the country.
  • Average rents in the private sector are forecast to rise 17.8% in the next five years
  • The average house price in rural parts of the South East is now more than 14 times the average local income
  • Home ownership in the South East will fall over the next decade, with owner occupiers dropping from 72% in 2010 to 69.7% by 2021.