The average house in the UK earned more than the average worker in the last year, according to the Post Office’s Cost of Buying & Moving study.
The study, compiled by the Centre for Economics and Business Research (Cebr), found that house prices increased by 12% – or £29,339 – over the last 12 months, while the average worker took home earnings of £27,271. At over £2,000 less, this means that more than 60% of the working population earned less than the average home in the last 12 months.
A typical home’s earnings now outpace those of a number of our most-relied upon professions, and significantly exceed the starting salaries of a junior hospital doctor (£22,636), a graduate nurse (£21,388), a teacher (£22,023), a police officer (£23,317) and a solider (£17,945).
John Willcock, head of mortgages at Post Office, said: “Property prices have soared over the last year, following a long period of recovery – and are set to increase further over the next five years. Whilst this is good news for those that already own their home, our study highlights the struggle that buyers and movers looking to climb the property ladder face, especially in getting on that all-important first rung.”
Homeowners in the East, South East and London saw their earnings outclassed the most – with properties in each region earning £34,002, £35,188, and £80,462 respectively. Houses in the nation’s capital earned £80,462 – almost twice as much as the average London salary (£41,095). They earn more than the average earnings of a fully qualified doctor in the UK (£70,648).
It is not just house prices themselves which have increased this year, but also the rate at which their earning are climbing. The average home earned more than £20,000 more this year than it did in the previous one (£8,954 vs £29,339) as the market boomed. In contrast, while house prices grew 12% over the last 12 months, the average worker saw their pay increase by just 0.6%.
Willcock added: “Forecasts indicate that this year’s strong house price growth will most likely be followed by a slight contraction of 0.8% in 2015, as the market responds to the Mortgage Market Review (MMR) guidance. One of the impacts of MMR is a lengthening in transaction times and more rigorous criteria, meaning the overall process of buying and moving is taking longer. However, as demand for properties remains high those on the hunt for first homes and dream properties will continue to face substantial costs. Another factor contributing to this contraction is the decline in demand from overseas buyers which has affected house prices in the capital.”
“As one of the top 10 providers of mortgages in the UK, we understand that owning a home remains an aspiration for many people, and that they need all of the help they can get. We offer a range of mortgages at low rates, some of which come without any arrangement fees. While we cannot cut house prices, we can help to reduce the overall cost of buying or moving and offer deals to suit a variety of needs.”
