Published on : Fri, 23 Sep 2005 12:12GMT
by : Lucy Andrews

Everyone planning to buy a house or residential property, especially first time buyers were startled as a new survey revealed that house prices were almost seven times more than the average salary!

According to research by the management consultancy firm, the Hay Group, one would have to borrow at least seven times more than their salaries to be able to afford a house in Wales. The survey stated that the gap between earnings and property price inflation had widened excruciatingly in the past five years.

More than anyone, this survey is sure to shock or rather discourage first-time buyers who have been tying to step on to the property ladder. Besides, it also dismisses the long-known mortgage maxim amongst lenders, as per which it was possible for buyers to borrow up to three times of their annual salaries.

Even five years back, the average property prices in Penarth stood high at an appalling five times of the average salary, and the current figures had only added fuel to the fire. Houses in the not much-liked towns of Hull and Merthyr Tydfil known for reasonable price rates, also carry hefty price tags that are a whopping four times more than the average salary in Wales.

Ben Frost, author of the report commented on the 70% increase in house prices, saying, “Buying a house based on borrowing three times your salary is definitely a thing of the past. There’s no escaping the fact that wage levels are simply not keeping pace with house price inflation anywhere in Britain. While increased house prices might make consumers feel more wealthy, the truth is the buying power of wages has taken a nosedive when it comes to property.”

Of course, people who have already bought homes will heave a sigh of relief for the intelligent decision they made of purchasing a house before. But, what is most unfortunate is that while the estimated value of house has grown two-fold in just 5 years since 2000, the average national wage has miserly increased by 20%. It is more than obvious, what impact such drastic discrepancies are going to have on generation next, as first-time buyers will be soon left with no choice but to bid their dream houses goodbye.

The affordability issue regarding houses seems to have built primarily on the most affected south-eastern parts of England. Besides, it has only intensified worries concerning the latest slump in the property market.

In any case, concerned government bodies need to get together and spruce up their policies to avoid a major economic crisis that is only burgeoning by the day.

It seems that unrealistic asking prices and estate agent valuations continue across Britain making current property price levels unsustainable.