House prices have risen four times faster than pay over the last decade.
These are the findings of the Trades Union Congress (TUC)which says that since 1997, when the average house could be bought for £60,000, equivalent to three years and six months of the then average wage of £17,000, house prices have risen by 180 per cent taking the average house to £168,000, while the average wage has gone up by only 43 per cent, to just over £24,000.
And according to the TUC, this means that it now takes nearly seven years of an average employee’s wage to buy an average house.
Regional differences do apply – in the well-off London boroughs of Kensington and Chelsea it now takes more than 20 years of the local average salary of £26,000 to buy the average house, which now costs more than half a million pounds.
The gap between pay and house prices has grown the most in West Sussex where prices have gone up more than nine times faster than pay, followed by Waltham Forest in east London and Luton.
TUC general secretary, Brendan Barber said: “Housing is by far and away the biggest cost for most people at work. These stark figures bring alive the housing crisis. They show just how quickly buying your own home has gone out of the reach of many working people. It is striking that house prices seem to have gone up in line with the pay of top directors and the super-rich, rather than middle and low earners.”
Barber said that the research highlights the way in which housing has become ‘an engine of inequality’.
“Of course sustained low interest rates and an excess of demand over supply have also helped fuel higher prices, but it is clear that demand at the top of the market from those with city bonuses and inflated boardroom pay has fed down to the rest of the market.”