It’s no secret that getting on the property ladder is tough.
But things are only going to get harder for first-time buyers, who will need to earn £64,000 a year by 2020 to buy their first home, according to research from housing and homelessness charity Shelter.
The figure is nearly a fifth more than the current £52,000 needed for a typical first-time buyer’s mortgage today, and is on top of a deposit of £46,000 that they’ll also need, Shelter said.
The hike in the amount first-time buyers will need to earn is largely due to rocketing house prices, which are set to rise to £270,000 over the next four years.
The research looked at the salary and deposit needed for the average first-time buyer today, and calculated what they would be in 2020 if they grew in line with projected increases in house prices.
Shelter said the figures come as no surprise, since the UK’s housing shortage has seen house prices rise six times faster than wages over the last five years.
Unless the government commits to building homes people on ordinary incomes can afford, the situation is only likely to get worse, the charity warned.
“When house prices are increasing six times faster than the average wage, it’s no wonder people on ordinary incomes are being locked out of a home of their own,” said chief executive Campbell Robb.
“With the situation only set to get worse, Generation Rent will be forced to resign themselves to a life in expensive, unstable private renting, and wave goodbye to their dreams of a home to put down roots in.
“It doesn’t have to be like this. The government has the power to turn our housing crisis around, but only if they stop with schemes like Starter Homes which only help higher earners, and start investing in homes that people on ordinary incomes can actually afford to live in.”
Shelter said its projections are based on a report by Professor Paul Cheshire, professor of economic geography at LSE, who anticipates UK house prices increasing by 23% by 2020.
According to Shelter one nurse, named only as Mike, described how he was stuck renting with little hope of owning his own home.
“On a nurse’s salary and with house prices so high, I can’t see how I’ll ever own my own home.
“At the moment, it feels like nothing more than a pipe dream.
“I’m stuck renting and looking at moving away from where I currently live because rents have gone up so much as well. It just seems so unfair – if you work hard, you should be able to afford a place to call home.”