As reported by the Daily Express newspaper the other day, house prices up £2,221 a month and wages up also. Full article here...
This is great news for those who have a house. However, I don't think 2.7% annual salary increase will keep up with the property increase though. If you are not a first time buyer and looking to buy an investment property (or another house), you will more than likely require a 25% deposit. If you are going to wait till next year to save up, then you will now have to try and save £555.25 (25% of £2221) per month to keep in line with house price increase.
Whilst chatting to frends of mine, they said they were wanting to invest in property for their childrens future, but were going to wait till next year when they will have saved enough money. Well, they will now have to save an additional £6,663 for the deposit from now until this time next year!
If you are on a £25,000 annual basic salary and you need to get an additional £6,663 to keep up with the house prices for the year, then you will need to ask the boss for a 26.7% pay rise. (Note that this doesn't take into consideration your tax and NI deductions etc). Failing that, you could sacrifice more of your free time and do more overtime shifts. When house prices increase further, then you will have to give up even more spare time in return for overtime shifts - if they are available.
Our first time buyers seem to be fortunate as they only require a 5% deposit. However 5% of not much, is well, not much! Young couples are usually lower on the employment and salary ladder. £20,000 annual basic salary requires you to now find £1,332 per year to keep up with house price increase (£2,221 x 12 months = £26,652 x 0.05 (5%) = £1,332). That equates to £83 per month to stay on pace with house price increase.