Generation frozen out in East over house prices

Generation locked out of broken market in East of England as average property price rises to over £237,000, report shows

The average property in the East of England now costs £237,668 while private rents are rising sharply, according to a report released by the National Housing Federation - leaving an entire generation out in the cold. The average worker would have to save every penny from their pre-tax salary for almost three years just to raise the £59,000 deposit.

The report, called ‘Home Truths East of England’, shows that the average property now costs 10.8 times the average income of £21,923. A salary of £50,929 is needed to obtain a 75% mortgage at 3.5 times income while renting a home in the private sector is expected to be 21% more expensive in the next five years – the second largest rise in the country – putting a squeeze on living standards across the region.

Even buying a lower value home (a property in the bottom 25% of prices) for £145,000 requires a salary of £31,071 to obtain a 75% mortgage and a deposit of over £36,000.

Average house prices for counties and unitary authorities are:

Hertfordshire   £317,376    –   12.1 times average local income

Essex    £247,062    –   11.0

Cambridgeshire   £239,143    –   10.1

Central Bedfordshire UA  £223,526    –     9.1

Bedford UA    £218,045    –   10.0

Southend-on-Sea UA             £211,140    –     9.7

Suffolk      £206,106    –   10.6

Norfolk    £189,952    –   10.4

Thurrock UA    £181,786    –     8.1

Luton UA    £160,361    –     8.3

Peterborough UA   £155,751    –     8.2

The Federation’s Claire Astbury said: “The East of England has become unaffordable for ordinary hardworking people who have little realistic chance of buying their own house, triggering even greater demand for good social housing or a desperate search for a home in the more expensive private rented sector. Housing associations built 36% of all new homes finished in the East of England in 2010/11 despite very difficult circumstances.

“Ministers should make a renewed commitment to building the affordable homes we need and identify housing as a key driver for economic activity. Housebuilding is a crucial part of economic recovery, creating real jobs, and supporting apprenticeships and training.”

The Federation, which represents England’s housing associations, warns that huge social housing waiting lists and sustained high prices are making it desperately hard for younger people and low-to-middle income earners in urban and rural communities.

And the chronic under-supply of homes threatens to get worse as the number of new households requiring homes in the East of England is forecast to rise 34% by 2033, the largest in the country.

Affordability remains a huge problem across the region. The house price divided by average local income ratio show the five most unaffordable places are:

Uttlesford, Essex  15.6   (£335,952 average price)

Hertsmere, Hertfordshire  15.4   (£373,700)  

St. Albans, Hertfordshire  14.2   (£420,396)  

Three Rivers, Hertfordshire 13.9   (£393,228)  

Cambridge, Cambridgeshire   13.0  (£321,189)  

And the five most ‘affordable’ areas are:

Fenland, Cambridgeshire     7.3   (£144,202 average price)

Ipswich, Suffolk     8.1   (£148,902)

Thurrock UA      8.1   (£181,786)

Peterborough UA     8.2   (£155,751)

Luton UA       8.3   (£160,361)

Astbury said: “Our report shows we need a reformed planning system that supports the building of affordable homes and the use of suitable surplus public land to build on. The need for new affordable rented housing has never been greater.”