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Average South-East Workers priced out of Housing Market, say GMB

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Workers on average earnings in the South East are priced out of the housing market in all 63 areas a new GMB report published today that shows current average house prices in the area are between 7 and 18.5 times average earnings.

In the South East as a whole, the average house price in July 2016 was £313,315 which is 10.4 times the average full time earnings of £30,074.  House prices are rising at a much faster pace than earnings with the house price to earnings ratio now 7.8 on average across the UK.  Average house prices in the South East increased by 11.9% in the year to July 2016.

The situation is most extreme in South Bucks where average house prices are 18.5 times average earnings, 15.9x in Elmbridge, 15.3x in Mole Valley, 14.1x in Tandridge  and 13.7x in Sevenoaks.

A ratio of 4.5 times a borrower’s income is regarded as the maximum that banks and building societies will lend.

Set out in the table below are house price data and average earnings for all authorities in the South East ranked by areas with the highest ratio.

    Average property price – July 2016 Median full time earnings – 2015 ratio
  South East £313,315 £30,074 10.4
         
1 South Bucks £636,215 £34,305 18.5
2 Elmbridge £613,399 £38,582 15.9
3 Mole Valley £473,592 £31,015 15.3
4 Tandridge £445,231 £31,617 14.1
5 Sevenoaks £420,196 £30,731 13.7
6 Chiltern £525,874 £38,766 13.6
7 Oxford £415,484 £30,689 13.5
8 Epsom and Ewell £468,323 £34,970 13.4
9 Windsor and Maidenhead £489,207 £37,181 13.2
10 Chichester £361,999 £27,852 13
11 Woking £401,014 £31,393 12.8
12 Guildford £432,259 £33,854 12.8
13 South Oxfordshire £401,411 £31,818 12.6
14 Runnymede £400,131 £31,740 12.6
15 Brighton and Hove £355,688 £28,309 12.6
16 Waverley £455,113 £37,553 12.1
17 Reigate and Banstead £426,207 £35,175 12.1
18 East Hampshire £360,370 £29,773 12.1
19 Adur £301,028 £25,397 11.9
20 Wycombe £382,941 £32,396 11.8
21 Mid Sussex £367,793 £31,716 11.6
22 Surrey Heath £390,303 £34,278 11.4
23 Vale of White Horse £361,989 £32,123 11.3
24 New Forest £313,779 £28,106 11.2
25 Bracknell Forest £348,304 £31,213 11.2
26 Wokingham £421,143 £37,836 11.1
27 Hart £401,479 £36,240 11.1
28 Aylesbury Vale £323,048 £29,742 10.9
29 Lewes £310,662 £28,854 10.8
30 Arun £267,474 £24,989 10.7
31 Spelthorne £366,715 £34,358 10.7
32 Slough £301,778 £28,376 10.6
33 Wealden £318,900 £30,111 10.6
34 Tunbridge Wells £372,840 £35,331 10.6
35 West Berkshire £335,893 £32,000 10.5
36 Reading £307,718 £29,351 10.5
37 Rother £269,147 £25,927 10.4
38 West Oxfordshire £324,358 £31,808 10.2
39 Rushmoor £283,386 £28,110 10.1
40 Cherwell £292,521 £29,173 10
41 Tonbridge and Malling £345,894 £34,996 9.9
42 Dartford £289,103 £29,359 9.8
43 Test Valley £307,191 £31,426 9.8
44 Crawley £274,985 £28,374 9.7
45 Ashford £265,402 £27,948 9.5
46 Basingstoke and Deane £295,532 £31,323 9.4
47 Maidstone £277,692 £29,829 9.3
48 Gravesham £266,086 £28,702 9.3
49 Fareham £275,413 £30,102 9.1
50 Milton Keynes £254,008 £27,821 9.1
51 Havant £248,381 £27,462 9
52 Thanet £205,838 £22,972 9
53 Eastleigh £261,426 £29,761 8.8
54 Eastbourne £223,382 £26,630 8.4
55 Canterbury £267,383 £32,349 8.3
56 Shepway £232,836 £28,231 8.2
57 Isle of Wight £199,571 £25,159 7.9
58 Swale £230,664 £29,652 7.8
59 Medway £225,087 £29,191 7.7
60 Southampton £198,642 £25,918 7.7
61 Hastings £183,607 £24,381 7.5
62 Portsmouth £192,403 £26,461 7.3
63 Gosport £191,064 £27,430 7
         
  Dover £211,173 x x
  Horsham £360,619 x x
  Winchester £388,943 x x
  Worthing £268,074 x x
         
  x – figures not available      

Paul Maloney, GMB regional secretary, said, “These figures show that a massive programme to build more houses, especially houses for rent, by the Local Authorities is absolutely essential in all parts of the South East and has to get underway without delay.

We have been talking about this problem for far too long, there can be no excuses for not providing housing to people that they can afford to live in on average wages.

The decisions of the Thatcher government in the 1980’s to sell council housing stock,  and not replace it, and to pay landlords housing benefit instead of providing social housing directly has been a huge and expensive mistake.

Last year, for example, £24 billion was spent on housing benefit.  If a fraction of that amount had been spent on social housing for rent, the strain on the tax payer would be less and people would have housing they can afford to live in.

This madness of selling council and Housing Association houses is still going ahead. GMB is calling for the regulations to bring into effect the Housing Act to be opposed when they are back in Parliament. Selling social housing, at a time of dire shortages of homes for rent at affordable prices, is irresponsible madness. Labour councils and trades unions should seek to mobilise opposition to the Act.

These mistakes need to be corrected without delay, fair and affordable housing is a basic aspiration for all.”

1 Source: House price data from UK House Price Index for July 2016. UK HPI data published by Land Registry © Crown copyright 2016. The UK House Price Index (HPI) uses house sales data from the Land Registry and Registers of Scotland and is calculated by the Office for National Statistics.

2 Earnings data is from the Annual Survey of Hours and Earnings 2015, Office for National Statistics. Data is for gross median annual pay for all full time employees by place of residence.

3 GMB recognise that the house price to earnings ratio is only one measure of housing affordability. In practise, households seeking to buy a new property will possibly have 2 incomes and the lender will take that additional salary into account when working out affordability. However, the house price to earnings ratio can use data from the Annual Survey of Hours and Earnings which is more recent than other incomes data and the survey is much larger, enabling more robust analysis. A recent study by the Institute for Fiscal Studies shows that ‘the story has been broadly the same whether looking at the ratio of prices to family income or the ratio of prices to individual earnings.’

Contact: Paul Maloney on 07801 343839 or Michelle Gordon on 07866 369259