Does Your Home Earn More than You Do?

Added on November 20th 2016

Does Your Home Earn More than You Do?

If you are living in London or anywhere in the South East of England, your home may actually earn more than you do! House prices are rising so rapidly in some areas that the monthly increase in value is outstripping the household income.

Recent research by Halifax has discovered that rises in property values have outpaced salaries in more than a quarter of the UK’s local authority districts. This trend has gathered pace over the last two years in particular.

A good little earner

In Three Rivers, Hertfordshire, this gap has been the widest, with price rises being, on average, £147,990; this is compared to the area’s average household income of £97,992.

The top ten areas where property value rises beat take-home pay included seven London boroughs – Harrow, Greenwich, Hillingdon, Ealing, Brent, Merton and Waltham Forest.

The regions

Outside London and the Home Counties, the trend involves slightly narrower gaps, but it’s still there. In Warwick, rises outstripped salaries by £24,723 on average and in South Northamptonshire the average gap was £14,837 (both figures are from 2015).

Halifax compared average property value rises and pay over the last five years and discovered that the top performers were all in London. Hammersmith and Fulham saw the biggest disparity, with an average rise of £248,971 compared to an average take-home of £108,653.

Bad news for first-time buyers

Since the housing market slump of 2008 and 2009, the recovery has led to big price rises in some areas of the UK, especially London and the Home Counties. The fact that rises alone dwarf many households’ income makes it so much harder for people to get on, or to move up, the property ladder.

While it may be good news for homeowners, who are essentially bringing home a second or third (and in some cases substantial) salary, this trend means that first-timers are finding themselves increasingly out of the property loop. This could lead to more people seeking shared ownership properties in suburban areas.

 

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