House prices in South West 'nearly 12 times average salary' - NHF

Published by Jon Land for 24dash.com in Housing

The housing market in the South West of England is 'broken' with the average price of a home in the region nearly 12 times the average salary, according to research published today.

The National Housing Federation's Home Truths report for the South West warns that rising rents and a lack of affordable housing are making living in the South West harder than ever.

The report reveals the average home in the region now costs £228,940 - nearly 12 times the average South West wage of £19,713. With house prices having increased three times faster than incomes in the region over the past decade, they now cost 15% more than in 2005 and 116% more than in 2000.

Affordability is an even greater problem in rural parts of the South West where the average home costs 13 times the average local income. Around a third of the South West’s population live in small market towns or villages – the highest proportion of any region – but, according to a Federation poll, 81% of them believe local families and young people are being forced out of the countryside by high house prices.

Across the South West, the report warns the ‘affordability gap’ could be set to worsen as the gulf between supply and demand is continuing to grow. In total 13,220 new homes were built in the region in 2010/11 – enough to house just 48% of new households expected to have formed in the year.

Looking ahead, Government projections suggest the number of households in the South West will increase 30% by 2033. Despite this growing need, and with one in 15 households on social housing waiting lists (over 148,000 households), South West local authorities have axed more than 106,000 planned homes since the abolition of Regional Spatial Strategies in 2010, the report adds.

To fix the broken housing market, the National Housing Federation is calling on the government to:

• Make a renewed commitment to building new homes at scale
• Identify housing as a key driver for economic activity
• Deliver a reformed planning system that supports the building of affordable homes, ensuring private developers continue to build social housing on sites of private development through the use of planning gain
• Ensure that councils undertake robust housing needs assessments on which to base future development plans

Jenny Allen, South West Lead Manager for the National Housing Federation, said: "This year’s Home Truths report shows that - despite a deep recession - house prices in the region remain out of reach for thousands of households in the region.

"As unemployment is on the up and benefits are set to be slashed, private sector rents also look set to rise. To cap it all, we’ve also seen the first increase in homelessness since 2003 - a 10% rise with more than 3,200 households accepted as homeless by local councils in the South West in 2010/11.

"Lack of supply is at the root of the problem. Ministers need to act now to implement a range of measures to turn the tide on the current housing crisis, ensuring that homes continue to be built at scale in the South West, that affordable housing options remain, and that housing is properly regulated across all sectors."

Nick Horne, Chair of the South West Regional Committee (which represents the region’s housing associations) said: "With house prices now up to almost 12 times the average wage in the region and private sector rents also set to rise, we must ensure that there is an affordable option for people to live in the South West.

"Housing makes a vital contribution to the economy and, despite the recession, housing associations built 18% more homes last year than the year before. This is a clear sign of our commitment to providing housing solutions to people from all walks of life in the region, even in the most challenging of environments.

"We are taking the opportunity to remind the Government, local authorities, and the emerging regional bodies such as Local Enterprise Partnerships and Health and Wellbeing Boards of the crucial role housing associations play in the region and its economy."

South West Home Truths 2011 is being launched at a special reception at the Palace of Westminster, hosted by North Cornwall MP Dan Rogerson. MPs and Councillors will hear a keynote speech by National Housing Federation Chair, Lord Matthew Taylor. Among them are Newton Abbot MP Anne Marie Morris; Bristol West MP Stephen Williams; Devizes MP Claire Perry; St Austell and Newquay MP Stephen Gilbert; South West Wiltshire MP Andrew Murrison; Plymouth Moor View MP Alison Seabeck; St Ives MP Andrew George; Mid Dorset and North Poole MP Annette Brooke, Bristol South MP Dawn Primarolo and Exeter MP Ben Bradshaw.

The Federation's ‘league table’ of the least affordable local authority areas in the region puts the Cotswolds top with house prices currently more than 19 times the average income:

1. Cotswolds, Gloucestershire: £351,051 (19.2 x £18,330 average income)
2. South Hams, Devon: £323,360 (16.7 x £19,328 average income)
3. East Dorset: £293,145 (15 x £19,594 average income)
4. North Devon: £225,327 (14.8 x £15,215 average income)
5. Poole, Dorset: £274,067 (14.6 x £18,767 average income)
6. East Devon: £266,470 (14.3 x £18,595 average income)
7. West Somerset: £226,981 (14.2 x £15,954 average income)
8. Bath & North East Somerset: £295,506 (14.1 x £20,987 average income)
9. West Devon: £236,610 (13.9 x £17,061 average income)
10. North Dorset: £253,745 (13.9 x £18,231 average income)
11. Purbeck, Dorset: £275,917 (13.9 x £19,900 average income)
12. Torridge, Devon: £210,227 (13.8 x £15,288 average income
13. Christchurch, Dorset: £285,176 (13.7 x £20,862 average income)
14. Cornwall: £228,585 (13 x £17,628 average income)
15. Teignbridge, Devon: £226,172 (12.7 x £17,878 average income)

NB: The affordability ratio is the house price divided by individual average income.