The new analysis compares the local asking prices for modest 4 and 5-room homes with the average incomes of younger working households in every district in England. According to these ‘affordability’ tests, young earners in London face the worst problems becoming owner-occupiers; but the rest of the South East is not far behind. For example:
A majority of the 40 ‘worst’ districts where nurses, teachers, police officers and social workers find it hardest to start buying a house are in the South East region. These are: Elmbridge, Epsom & Ewell, Mole Valley, Guildford, Reigate & Banstead, Runnymede, Spelthorne, Surrey Heath, Tandridge, Waverley and Woking in Surrey; Windsor & Maidenhead, Wokingham and West Berkshire in Berkshire; Chiltern, South Bucks and Wycombe in Buckinghamshire; Hart and Winchester in Hampshire, Horsham in Sussex, Sevenoaks in Kent and Oxford.
Six South East districts feature in another ‘worst 40’ list of places where the vast majority of households with earners in their 20s and 30s do not have enough income to afford even the less expensive local starter homes. The region’s least affordable districts on this measure are: Runnymede, South Buckinghamshire, Epsom & Ewell, Guildford, Elmbridge and Woking.
The report, by Prof Steve Wilcox of the University of York, presents three different ‘affordability’ indices comparing younger workers’ earnings with house prices for 4-and 5-room homes in every borough and district in England. These are:
- Local house price to income ratios, calculated by comparing the average price for starter homes in each district with average local incomes for working households under 40.
- An access to ownership index that calculates the percentage of working households under 40 in each district whose pay is too low to purchase even the least expensive starter homes (the bottom quarter of the local price range).
- A key worker index, identifying local authority areas where a qualified nurse, teacher, social worker or police constable in post for three or four years would be unable to afford the least expensive starter homes.
The analyses reveal that:
- Epsom & Ewell has the highest house price to income ratio (5.34) in the South East outside London. A small starter home in the district on average costs more than five times the average annual income of local households with earners in their 20s or 30s. It is followed by Runnymede (4.96), Oxford (4.91) and South Bucks (4.82).
- The lowest price to income ratios for South East starter homes are in Gravesham (2.75) and Ashford (2.89) in Kent and in Milton Keynes (2.89). This is below the national average for England of 3.4 as well as 3.96 for the region.
- Affordability issues for key workers are especially acute in London and the South East because their earnings are based on national, not locally-determined pay scales. ‘London weighting’ and other area-related salary supplements are not enough to offset exceptionally high housing costs.
- In the most expensive districts even a key worker couple with two incomes would be unable to afford the less expensive starter homes. For example, the income of a nurse, qualified for 3 or 4 years and working in Windsor & Maidenhead or Mole Valley in Surrey would be barely a third of the estimated £57,000 a year needed to buy a typical small home. In Tandridge - number 39 in the national ‘worst 40’ league table - it would be less than half the £46,000 a year required to set foot on the housebuying ladder
Prof Wilcox said: “These figures provide startling evidence of how the housing affordability crisis affects young people and key workers in large swathes of southern England. The house price boom in London and surrounding districts of the South East means that very modest properties are often beyond the reach of working households. Even in dual-income households, key workers such as nurses and teachers still cannot afford to start buying their own home in many areas in the South East.”
Lord Best, Director of Joseph Rowntree Foundation, added: “This analysis adds a new dimension to the warning we issued a year ago about the shortage of affordable homes across the South and the dire long-term consequences if it is allowed to get worse. If existing home owners living in those districts want local hospitals, care homes, schools and police stations to be properly staffed, they can no longer ignore the case for more housing. In the same way, families in these areas will recognise that children, once they become adults, may be forced to move away by housing shortages and unaffordable prices – or else depend heavily on funds from their parents.”