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Report is ‘frightening reading’ as house price/wages gap grows

First-time buyers need to earn a minimum of £41,000 to get on the housing ladder as the gap between house prices and wages grows, a new report by KPMG says.

The average UK salary is £22,044, highlighting the extent of the affordability crisis.

The problem is worse in London, where the average salary required to buy a home is £77,000 but the actual average wage is £27,999.

The figures are based on a borrower taking out a 90 per cent LTV mortgage at a loan-to-income ratio of 4.5.

KPMG’s report highlights how affordability varies between the North and the South.

In the South-east, borrowers would need an annual wage of £46,010, against the actual average salary of £24,391.

In Northern Ireland, which has the smallest gap, the average annual wage needed is £21,219 against an actual average salary of £18,857. 

In England, the narrowest gap is in the North-east, with an average wage of £20,149 against an average £23,616 required.

KPMG head of housing Jan Crosby says the figures show that a long-term solution is needed to solve the housing crisis.

Crosby says: “These figures make for frightening reading and show that housing affordability is no longer just a problem for lower-wage earners. Now, unless you earn well above average or receive an inheritance, it is unlikely you will be able to afford to buy, no matter where in the UK you live.  

“And yet this isn’t just about homeownership because our findings show genuine concern over wider affordability of housing, whether buying or renting. 

“Being able to live in a stable home is a basic human need, tied up with important feelings of choice and certainty, and we are living in a world now where only a few can hope for that, which cannot be right.” 

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