League tables reveal the least affordable areas for young homebuyers in South West
Younger earners in their 20s and 30s find it harder to set foot on the home ownership ladder in the South West than any other English region outside London, according to new research comparing local pay with house prices.
The study for the Joseph Rowntree Foundation shows that the asking price for modest homes in Purbeck, East Dorset or North Cornwall demands almost as big a share of the typical pay packet for local workers under 40 as higher priced homes in the fashionable London boroughs of Westminster, Camden and Islington.
Altogether 15 districts in the South West figure in a league table of the 40 ‘least affordable’ areas in England. Districts as varied as Salisbury, Gloucester, Penwith in Cornwall and Torridge in Devon, feature on the list because relatively low local rates of pay place home ownership beyond the reach of young working households even though local house prices are less than those in London and the South East.
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:
The analyses reveal that:
- Across the South West region as a whole a small starter home costs more than four times (a ratio of 4.2 to 1) the average annual income of local working households with earners in their 20s or 30s. This compares with a national average of less than three and a half times the average income (3.4 to 1).
- There are 16 south western districts where the house price to income ratio for younger workers exceeds the average for London (4.79 to 1). These are: Carrick, North Cornwall and Penwith in Cornwall; North Devon, Torbay and Torridge in Devon; Bournemouth, East Dorset, North Dorset, Poole, Purbeck, West Dorset and Weymouth and Portland in Dorset; Cotswold and Gloucester in Gloucestershire; and Salisbury in Wiltshire.
- The only South West district where the house price to income ratio is below the average for England is North Somerset.
- Average prices for 4- and 5-room homes are lower in the South West (£124,508) than the South East (£152,555). But the differential between average incomes for younger working households is even wider: £29,626 in the South West compared with £38,478 in the South East.
- The access index shows nine areas where fewer than one in five of younger working households locally could afford to start buying even a less expensive starter home. These are: Penwith and North Cornwall; North Devon and South Hams; Purbeck, East Dorset, West Dorset, Bournemouth and Salisbury.
- Workers in ‘key’ professions often have their pay rates decided nationally, rather than locally. For them, starter homes in the South West tend to be more affordable than in the South East. Even so, the income of a nurse, qualified for three or four years and working in Bournemouth, East Dorset, Poole, Purbeck, Cotswold or Salisbury would be only half the estimated sum needed to buy a typical small home in those areas.
Prof. Wilcox, whose home is in the region, said: “This analysis challenges any assumption that the housing affordability crisis is confined to London and the South East. When local incomes are part of the calculation, and we look at the price of starter homes, it is clear that young working people in many south-western districts, from Cornwall to Dorset, Gloucestershire and Wiltshire, face severe difficulties finding even a small home they can afford to buy. Policy makers would be foolish to focus their attention solely on the higher house prices in the South East and ignore the way that affordability problems are spread across the South West as well.”
Lord Best, Director of the Joseph Rowntree Foundation, said: “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.”
