First time buyers need to earn £64,000 by 2020
A new study by the housing charity Shelter has predicted first time buyers in the UK will need to be earning a salary of £64,000 by the year 2020, which is more than double the average salary of today. If correct that also means that Londoners will need to earn at least £100,000.
The study is based on forecast figures for Santander, and was produced by Professor Paul Cheshire, of the London School of Economics.
The calculations are based on a cumulative rise of 23%, which is predicted by 2020. At this point the UK average house price will have risen to £270,000. This means a salary of £64,000 is required to get a mortgage, based on current average income multiples.
If the UK’s growth continues at 2%, the UK average salary will increase from £27,600 to £29,532.
On the flip side it has also been suggested by RICS (Royal Institute of Chartered Surveyors) that property prices could fall in the coming months of 2016, especially in London and South East.
This prediction is based on uncertainty around the UK’s position in the EU, as the EU referendum approaches. However, RICS also believe this will have a small impact on the UK property market long term, due to the fact that housing demand continues to outstrip demand throughout Scotland, England, Wales and Northern Ireland.