Housing market accessibility is now 350% worse than it was in 1996 and first time buyers are using almost half their take home income to service their mortgage, according to the Royal Institute for Chartered Surveyors.
The RICS accessibility index also found that the cost of becoming a homeowner has increased by 8.4% in the year to 20 June 2007.
A first time buyer couple on lower quartile earnings of around £26,000 each will need to save around 96% of their take home pay to save up the typical £25,600 of upfront costs needed to buy a home within a year, according to RICS. This compared with a low point of 21% in 1996, when housing was at its most accessible.
The research also shows the same couple would need to pay 44% of their joint income to service their monthly payments, up from 38% in the first quarter of 2007.
David Stubbs, senior economist at RICS, says: “Even if prospective first time buyers make it onto the market, they face mortgage payments which take up a higher percentage of their take home pay than at any time since 1990. House prices have risen by over 11% a year since 1996 whereas first time buyer incomes have only risen by 3.5% a year.”
London and the South are the areas with the least accessibility to housing, with couples needing to save over 100% of their take home pay to get a foot on the property ladder, compared with just 73% in the North West and Yorkshire and Humberside. London households also pay more per month, around 51% of take home pay, while those in Yorkshire and Humberside spend 33% of their income on servicing their mortgage.
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