Prices of homes are soaring in the UK and new findings shows that that is partly because homes have been bringing more incomes than the owners of nearly a third of the UK, over the last two years.
In a new study, UK’s biggest mortgage lender, Halifax, found the values of property have jumped by more than average earnings in 31% of local authority districts.
The result of the findings also shows that Haringey in London provided a classic demonstration of how prices of property have been fast outstripping owner’s earnings over the last two years.
A spokesperson for well known property portal The House Shop said, “The value of the average property there has risen by £91,450 higher than the average income over the last two years – equating to an increase of £3,810 per month higher than its owner’s income.“
Harrow, also in London, follows closely with the average value of properties out-growing average earnings by £77,791.
In third place was St Albans in Hertfordshire which has seen prices in this district — popular with London commuters — inflate by £72,995 more than the average earning.
Not surprisingly, nearly half of the people polled (46%) said buying property was the best way to make money and secure one’s retirement.
The Office of National Statistics’ (ONS) recently published data /16 for the Wealth & Assets Survey 2014 and showed this has increased from the 43% rate in its 2012/14 poll.
However, 40% of the respondents still believed an employer pension plan was the surest to prepare for retirement.
The Halifax study also discovered that the number of areas where property value increases were outstripping incomes has risen from its 2015 rate of 28%.
London, East of England, South West of England and South East make up 9 in 10 of the areas.
However, the trend is also obvious in areas outside of southern England.
For example, in the last two years, property value growths in Harrogate in Yorkshire has out-paced incomes by more than £12,500, while in Anglesey in Wales, house price increases have beaten earnings by more than £1,600.
The ONS data also indicates that at 40%, overall pension wealth constitutes the portion of family wealth, while property wealth comes in second place at 35%.
Property owners to still face old hurdles
Meanwhile, the recently released Spring Budget 2017 made no mention of the troubled property market, neither housing deficits nor stamp duty difficulties.
Despite repeated calls for Chancellor to lessen burdens, the average property buyer in London is still faced with a 21,000 stamp duty bill.
In the Spring Budget announced on Wednesday March 8, Chancellor Philip Hammond ignored pleas to reduce stamp duty charges, which would boost activities in the property market.
Although the government admitted in its Housing White Paper published in February that the property market needed fixing, tax thresholds remain unchanged from the levels introduced in 2014.
Currently, home buyers will have to pay the tax when buying a domestic property or a plot of land valued at more than £125,000, or £40,000 when buying a second home.
In London, where the asking price for the average property is £625,000, the stamp duty required is a staggering £21,250.