You now need to earn more than ever to live in a big city
House prices in urban areas have soared due to a serious shortage of houses up for sale in Britain. House prices in urban areas have increased by 10% this past year. This means that potential buyers will need to earn more than the average wage before their dreams of becoming the owner of a city home come true.
New research suggests that the average household income required to afford a mortgage in the 20 major cities in Britain, was £49,700, an increase from £45,000 the previous year. The study showed that people buying homes in Liverpool only needed a £26.500 deposit on average compared with a staggering £108,000 in London.
Hometrack, suggested the cause of this was a lack of supply of ‘affordable’ homes, alongside a low percentage of current homeowners choosing to move house. However, Hometrack predicts the situation may improve next year as the changes in stamp duty rates for second homes will see the investor demand weaken.
Richard Donnell, the director of research at Hometrack said “Earlier and faster rate rises than those assumed by the market would reduce the scale of house price growth as they would further impact investor demand and mortgage affordability”.
Aislinn Devlin, Pali Ltd
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