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House prices are 16 times average income

19 October 2007
Some houses in London are now worth 16 times more than the average annual income and are the least affordable homes in the UK, compared to a national average multiple of six, according to a study by market research body CACI.

In Kensington and Chelsea, for example, the average house costs £753,088, with an average annual income of £46,543 for the area, compared to the national average house price of £210,578.

The highest quality of life in the UK can reportedly be found in Wokingham, where residents of the old market town generally have higher earnings, better education, less crime and a longer life expectancy, Halifax has found.

Martin Ellis, Chief Group Economist at Halifax, commented that while residents of Wokingham have the best quality of life in the UK, living there “comes at a price with house prices £45,000 above the average for the South East.”

Such disparity as this and rising prices across the board have made it increasingly difficult for people to get on the property ladder. In light of this, the Government has pledged to build £3 million new homes by 2020 in order to ease affordability.

Housing Minister Yvette Cooper has commented on the Government’s commitments of the £10.2 billion cash boost for affordable housing: “Every region needs more affordable, decent homes – not just to own, but also to rent. Unless more homes are built, first-time buyers and young families will find it more and more difficult to get a foot on the housing ladder.”

Despite house prices rising with higher interest rates, and seven per cent of buy-to-let property investors reportedly making a loss, public confidence in the housing market remains relatively high, with 62 per cent of the general public thinking the market will rise and just 21 per cent of the public (48 per cent of investors ) predicting a crash.

“The general public and active investors’ optimism in the housing market could well be misplaced as there is increasing evidence that the housing market is slowing down following five rate rises and the recent credit crunch”, said Annabel Brodie-Smith, Communications Director of the Association of Investment Companies.

“The research demonstrates that the rate rises are already beginning to hit people’s finances and could well undermine future confidence.”

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