First time buyers priced out in the south

19 May 2003
First time buyers in the South West find it more difficult than ever to step onto the property ladder, new research suggests.

Research published by the Joseph Rowntree Foundation today, indicates that the real obstacle to home ownership is relatively low pay rates.

An affordability index was developed for the study, which compares local pay rates with house prices - most studies compare national pay rates with local house prices.

The study suggests that pay rates have a crucial bearing on access to home ownership and points out that many 'key workers' - such as nurses and teachers - living in the South East find it out of their reach because they are paid at a national rate as opposed to one that reflects the cost of living in the region.

However, there are 15 South West districts on the list of areas where housing prices are more than five time the average salary, which demonstrates how relatively low pay rates can act as the main barrier to ownership for young people, despite lower house prices than the South East.

Professor Wilcox, the author of the study, said: 'These figures provide startling evidence of how the housing affordability crisis is affecting large swathes of southern England. The house price boom in London and surrounding districts of the South East means that very modest properties are often beyond the reach of young, working households. Even in dual-income households key workers such as nurses and teachers still cannot afford to buy in many parts of London and the South East.'

But, he added: 'The analysis challenges any assumption that the crisis is confined to London and the South East.'

The study shows that the asking price for modest homes in Purbeck, East Dorset or North Cornwall demand almost as big a share of the typical pay packet for local workers under 40 as higher priced homes in the London boroughs of Westminster, Camden and Islington.

The research reveals that there are 33 local authorities where a small home costs more than five times the average annual income of local working households with earners in their 20s and 30s.

There are also 19 areas where fewer than one in five of younger working households living locally could afford to start buying even a less expensive starter home.

Bernadette Stokoe, National Housing Federation's Head of South Regions, said: 'This report confirms the validity of our own recently published research, The Evidence, which showed that home ownership affordability in the South West is as poor as in London and the South East. Policy makers haven't cottoned on to how much difference lower household incomes make in the South West to people's ability to buy, even at the lower end of the market.'

Although, the house price to income ratios are generally greater in the South West than in the South East, London still proves to be the most hostile environment for those looking to embark on home ownership than anywhere else in the country.

However, new figures from Rightmove indicate that house prices in the capital have fallen slightly.

Overall, it reports that house prices rose by 1.3 per cent last month as the end of the war in Iraq bolstered the market.

But, it reports that prices in Greater London fell by 1 per cent during the month, and rose by just 0.7 per cent in the East Midlands, and by 0.9 per cent in the South East.