House prices soar

House prices soared by 3.8 per cent for first-time buyers in August, according to the latest figures by the Office for National Statistics (ONS).

 
The surge in prices pushed the value of a typical home to a record ÂŁ284,000 and the average price of a starter home rose to ÂŁ215,000 after prices climbed ÂŁ2,000 in just one month.

 
With a 10 per cent deposit, buyers would need a salary of ÂŁ45,000 to be able to make their mortgage repayments.

 
“Prices have risen despite the government’s attempts to make house prices more affordable for first time buyers because of a huge shortage of houses,” said Unite assistant general secretary Steve Turner.

 
The government’s flagship scheme, Help to Buy, allows people to buy a house priced up to £600,000 with as little as a 5 per cent deposit.

 
But a report by business group London First has also revealed that soaring London house prices are costing the economy more than ÂŁ1bn a year.

 
Astronomical

 
Londoners have inadequate disposable income once they’ve paid astronomical mortgage repayments and rent.

 
The report found that shop workers, hospitality workers and administration staff would have to pay their entire per-tax salary to rent an average private home in London.

 
The problem is only set to escalate with prime minister David Cameron’s plan to extend the right to buy scheme to the 1.3m housing association tenants.

 
“Our growing housing crisis cannot be ignored any longer,” said Steve.

 
“The refusal of government to release investment to build desperately needed social housing is a crime against humanity,” he added.

 
Londoners face the highest risk of losing their homes because of repossession from mortgage lenders and landlords.

 
Unsustainable

 
“This continuous rise in the cost of housing is unsustainable – prices in both the rental and sales markets simply don’t match with people’s incomes,” said Steve.

 
There are also 3m adult children living at home with their parents because they cannot afford to get a foot on the property ladder, renting or buying.

 
“The government, rather than flogging off our social housing stock, should be investing at a time of low interest rates, in a massive council house building program and offering incentives under a ‘right to build’ not ‘right to buy’ scheme,” added Steve.

 
Have a look at the BBC’s website to see where in the UK you can afford to buy or rent, with its ‘Where can I afford to live?’ calculator.