Mortgages to reach 'ten times salary'

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Mortgages to reach 'ten times salary'

Fri 8th Jun 2007

The UK is in the midst of a housing price crisis, with the next generation of homebuyers likely to need a loan ten times their average annual salary in order to buy their first home, a new report has revealed.

The National Housing and Planning Advice Unit (NHPAU), a new organisation set up by the government to improve the availability of affordable homes, said that growing demand for housing was contributing to house prices continuing to rise beyond first-time buyers' means.

Although new plans have been implemented for the construction of 190,000 more houses a year, the NHPAU said that demand was likely to continue outpacing supply and that it would only continue to get harder for people to get onto the property ladder.

Housing prices are currently seven times the average annual salary, but it predicted that a continued shortage would cause them to climb to ten times the average salary by 2026.

The Royal Town Planning Institute has criticised the NHPAU's report, calling it a "simple knee-jerk reaction" to the current house price situation. It said that the report failed to address factors such as the current economic model in the house building industry, the availability of skilled labour and the lending policies of building societies.

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