Wolverhampton homes 5 times salaries

Fewer than a quarter of West Midlands local authority areas have affordable house prices for local people, according to new analysis published by the TUC. (2-9-14)

 

The TUC analysis of average (median) salaries and house prices by local authority area shows that in 1997 the average house price in the vast majority of local authority areas across the region was less than five times the average worker’s salary.

However, over the last 16 years house prices have outstripped wages across the region. Stoke-on-Trent, Coventry, Birmingham, Wolverhampton, Sandwell, Staffordshire Moorlands and Walsall are now the only areas where house prices are less than five times the average salary.

Most areas in the West Midlands now have a housing affordability ratio of at least five.  The affordability ratio of five is particularly significant, says the TUC, as the Bank of England has recently instructed banks to limit the proportion of mortgages they offer that are more than 4.5 times applicants’ salaries.

The TUC believes that the combination of soaring house prices, stagnating pay in the run-up to the crash and the longest real wage squeeze in over a century has left house prices more out of reach than ever before.

Whilst average house prices have yet to reach their pre-recession peak in many parts of the West Midlands, falling real wages mean that homes remain out of reach for local people, says the TUC. Recent analysis by the TUC found that pay packets in the West Midlands fell by around £38 a week in real terms between 2010 and 2013 – a fall of 7.3 per cent.

TUC Regional Secretary Lee Barron said: “The West Midlands has always had its blackspots in terms of housing affordability, but by and large houses and flats in most parts of the region were within reach of local people.

“Over the last 16 years, house price rises have outstripped people’s pay packets and left huge swathes of the region unaffordable. Last year, house prices in most local areas were more than five times the average local salary.

“We need to build more homes to get house prices back under control. With interest rates low, now is the perfect time for an ambitious programme of home-building, which would also help tackle local unemployment problems.

“But as more people give up on buying a home or decide they don’t want to get on the housing ladder, we need a better deal for renters so that they don’t get clobbered by soaring rents too.

“Housing affordability isn’t just about house prices though. Decent wages are just as important and there is a lot of ground to make up before we return to the kind of salaries that people were earning before the crash.”

 

–Local house prices to wages ratio across the West Midlands, 1997 and 2013

Local authority area	Ratio of house prices to earnings, 1997	Ratio of house prices to earnings, 2013
Shropshire	4.14	7.32
Lichfield	4.06	7.18
South Staffordshire	4.11	6.84
Tamworth	3.35	6.07
Stafford	3.85	5.91
Dudley	3.59	5.91
Telford and Wrekin	3.12	5.59
Walsall	3.29	4.97
Birmingham	2.80	4.73
Wolverhampton	2.89	4.70
Sandwell	2.93	4.52
Coventry	2.64	4.32
Stoke-on-Trent	2.39	3.57

Source: Department for Communities Local Government data on house prices https://www.gov.uk/government/statistical-data-sets/live-tables-on-housing-market-and-house-prices