Halifax survey shows house prices rose by 91% from 2000, but the average salary increased only by 40%
No wonder first-time buyers can't afford a home: house prices rose by 91% in the past decade, with the national average rising by more than £78,000, according to data released by the Halifax today.
During the same period the average salary has risen from £18,939 to £26,510 – a comparatively meagre 40% increase.
The figures are even worse for first-time buyers if you look at the increase in prices over the last complete cycle from trough to peak.
This saw the average house price in the UK increase by 132% between the fourth quarter of 2000 and the most recent market peak of £199,766 in the third quarter of 2007. This was followed by a 21% drop to £157,767 in the second quarter of 2009. As the market has stabilised house prices have subsequently increased by 4% to £164,310 at the end of last year, a level similar to the end of 2005.
And despite continuous squeals that house prices are worse in the south, the north/south divide has narrowed over the past 10 years, rising by an average of 102% in the north compared to 75% in the south. This means the average house price across southern regions (£206,091) is now 56% higher than in the north (£132,163). Ten years ago there was an 80% difference.
Eight of the 20 towns delivering the biggest increases were in Scotland, while only four were in the south – all in the south-west. But Penzance experienced the biggest increase in house prices since 2000 – 193% from £70,171 to £205,532 at the end of last year.
Properties in London went up the least – by 63% from an average of £153,454 to £250,720.
So where should you go if you are desperate to own your own home? Well, you could still try moving north, as Suren Thiru, the Halifax housing economist, says there has recently been a "slight" reversal in this trend, with the south of England outperforming the rest of the country.
And despite the big percentage increases up north, the actual prices are still much lower than in the south. The average price in Port Glasgow, which experienced the 20th biggest increase in the past decade, is just £111,726.
Alternatively, if you still need to live in the south for work reasons, you might want to go for those towns where properties have increased least in price on the grounds that they might do much better in the next boom (spurious I know, but investors seem to believe this tactic works with funds).
In this case try Swindon in Wiltshire, where the average house price is £156,006 after a 51% 10-year increase; Camberley in Surrey (£278,517 after a 47% increase); or Bracknell in Berkshire (£218,161 after a 46% increase). Or, if it has to be London, head for Twickenham, where properties have an average price of £390,238 following a 46% increase over the past 10 years.