House price to earnings ratios continue to rise

The latest statistical release from the Office of National Statistics shows that house prices in Swindon continue to race ahead of earnings. Prior to the credit crunch and the housing crash the price of lower quartile homes reached a peak of 7.28 times lower quartile earnings. As a result of the crash, prices dropped considerably. In 2010 the price of a lower quartile property was on average £120,000. By 2014 it was only slightly higher, but the two years after that saw a steep rise to £150,500 in 2016. The price was 7.20 times earnings, higher than the previous peak of 7.14 times earnings in 2008. At these levels low earners have no chance of getting a mortgage for even the cheapest properties.

Median house prices as compared to median earnings in Swindon were 6.26 times earnings at the high point in 2006. However, in 2016 they had had reached 6.66 times earnings, above the pre-crash level. So even some median earners will struggle to afford median house prices. Since 2013 median prices shot up from £154,950 to £195,000 in 2016.

The crisis of affordability is worsening, as prices continue to rise above earnings. The OBR’s latest budget assessment projects house prices rising at double the rate of earnings increases over the next 6 years.

At the same time private rents continue to rise above increases in earnings and now even some people on council house waiting lists are struggling to afford council rents. Council officers have estimated that 1 in 3 single people and 1 in 6 families cannot afford council rents.

Martin Wicks, Secretary of Swindon Tenants Campaign Group said:

“The latest ONS statistics underline the fact that the crisis of affordability in Swindon is getting worse. House prices continue to outstrip wage increases and many people, even if they could afford to pay the monthly mortgage payments, cannot easily stump up the deposits required.

Those who are forced to rent in the private sector are having to pay a higher percentage of their income as rents outstrip earnings. People under 35 are being penalised for the seeming crime of being young. The local housing allowance of £60 a week which applies to under-35s does not even cover the rent for a room in a shared house.

Meanwhile the council is losing homes through right to buy and the council is not replacing those homes sold. The council owns 250 homes less than in 2012. We need to stop this haemorrhaging of stock and start building council homes on a significant scale, otherwise the chronic housing crisis will continue unabated. We live in a town in which some people are renting garages to live in and as council officers have admitted the phenomenon of beds in sheds is growing.”

A Swindon Tenants Campaign Group Media Release March 20th 2017

Ratio of lower quartile house prices to lower quartile earnings

Ratio of median quartile house prices to median quartile earnings