House prices 'up to 11 times' salary

FIRST-time buyers in East Anglia are being cut further adrift from the housing market after a new report revealed property is selling at up to eleven times the average salary.

FIRST-time buyers in East Anglia are being cut further adrift from the housing market after a new report revealed property is selling at up to eleven times the average salary.

The report has led to increased fears that young people will be priced out of the property sector and be forced to leave the areas where they have grown up.

The figures, compiled by management consultancy firm Hay Group, show that on average homes across the region are 55% more expensive in relation to wages than they were in 2000.

This amounts to an increase that is six times higher than the annual wage, although in some parts of the east this rise is as much as 11 times.


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And it is a bleak picture for both Suffolk and Essex, with both counties consistently topping the regional average.

In Newmarket, Bury St Edmunds, Stowmarket and Sudbury house prices are eight times the annual salary, while in Ipswich and Felixstowe they are seven.

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Only Haverhill and Lowestoft, which are six and five respectively, are at the lower end of the scale.

Meanwhile Essex has some of the highest prices in the region, with property 11 times greater than the average wage in Brentwood and Epping, nines times higher in Chelmsford and Maldon, eight times higher in Colchester, Braintree and Witham and six times higher in Harwich and Clacton.

The report, which looked at changes in average house prices and salaries in

Britain between 2000 and 2005, has led to fears that perspective house buyers will now be priced out of the market.

Richard Spring, Conservative MP for West Suffolk, said: “It's very important that we provide housing that's affordable and unfortunately from the look of this it's clear that more and more is needed.

“Suffolk is a very desirable location for homeowners which pushes up prices and because wages have not risen at the same rate young people are unable to get themselves on the first rung of the ladder.

“They are increasingly under pressure from council tax and petrol tax and they just can't afford to do it. I often hear that young people want to live near their families when they first move out but at the moment cannot afford to do so and move away.

“The only answer that I can see is through more housing schemes and shared equity schemes to give people the opportunity to own their own home.”

Dr Wil Gibson, chief executive of rural community charity Suffolk Acre, agreed the lack of affordable homes for first time buyers in the region was a problem that needed to be addressed.

“It's a worrying statistic,” he said. “Lots of people even now will have well paid jobs but can't get onto the housing ladder. I was talking to someone only the other day and the maximum mortgage they could get was £70,000, which is very little and will buy you nowhere.

“It's a real issue. Not only do we have to worry about people moving out of the area to find homes but it also means we have problems attracting people into the area.

“In a rural context it is particularly worrying because it is doubly hard for those in the countryside because their sources of income are lower then elsewhere.”

Bob Feltwell, chief executive of Suffolk Chamber of Commerce, said: “It is a worry that people will be put off by the high prices but in our experience when people do come to Suffolk we find they refuse to leave because the quality of life is much better than elsewhere.

“The east of England is perceived as a growth area and unfortunately this is reflected in house prices but there are a lot of businesses who pay well enough for their staff to live here.”

Bob Russell, Liberal Democrat MP for Colchester, echoed the sentiments. “What we are witnessing here is the abject failure of government policies for the last 25 years,” he said. “Because not enough housing has been built during this time demand has outweighed supply causing an increase in prices.

“The housing stock we have at the minute is obviously insufficient and more needs to be done to address this so young people are not forced out of the area.”

However the message from estate agents was not to become too despondent as the housing market has showed signs of slowing down in recent months.

Colin Girling, of Colin Girling and Co Ltd in Ipswich and spokesman for the Suffolk branch of the National Association of Estate Agents, said: “Over the last five years we have seen a huge rise in house prices. For example in September 2000 we sold a three-bedroom semi in Northgate for £83,000 and you could expect to pay double that now.

“However I wouldn't say that prices have stopped people moving into the area. The last two properties I've sold have been to people from Colchester and I also recently sold to a young couple from Chingford.

“The message is not to be too despondent. If the price is right then it will sell. At any rate we don't anticipate that prices will go up at the moment and I would say to anyone looking to get on the ladder that now is a good time and to keep looking hard.”

Nationally house prices were 70% more expensive in relation to wages than in 2000, with the average home now costing six times the average salary.

The most expensive area is the south west with prices increasing by 92% in relation to salaries over the last five years, inflating prices to more than six times the annual income of local people.

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