Issue date
02 Sep 2014

Only five areas remain in the North West where houses cost less than four times the average local salary, according to new analysis published today (Monday) by the TUC. It shows that homes in half the local authority areas across the region have become out of reach for local people.

The TUC analysis of average (median) salaries and house prices by local authority area shows that in 1997 the average house price in all areas throughout the region was less than four times the average local salary.

More than half the local authority areas were ‘easily affordable’ in 1997 – with a house price to local wage ratio of less than three. No area had a ratio above five – a level which the TUC believes puts home ownership out of reach for local people, particularly if they only have one salary. In 1997 all ratios in the North West were below four.

However, there are no longer any areas of the North West that are ‘easily affordable’. Burnley, Hyndburn, Pendle, Knowsley and Blackburn with Darwen are the only areas left where house prices are less than four times the average local salary. Even previously ‘easily affordable’ areas, such as Bury and Rossendale, are now out of reach for many local people with house prices now over five times the average wage. Four others have also made the jump from ‘easily affordable’ to out of reach.

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. More than three-quarters of the areas in the North West are in excess of this.

In 2013, Ribble Valley was the most unaffordable area with an affordability ratio of 7.76. Back in 1997 Trafford was the most unaffordable area but average house prices were still under four times the median local salary. Burnley was the most affordable area in both 2013 and 1997.

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 will leave 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 North West, falling real wages means that homes remain out of reach for local people, says the TUC. Recent analysis by the TUC found that pay packets in the North West fell by around £42 a week in real terms between 2010 and 2013 – a fall of 8 per cent.

North West TUC Regional Secretary Lynn Collins said: “We have seen a huge shift in the North West, from a region that contained no area where houses prices were out of reach to local people to one in which almost half now are.

“In 16 years, we have gone from having 21 areas with house prices that are easily affordable to none. Property price rises have outstripped peoples’ pay packets and left huge swathes of the region unaffordable. We need to start implementing solutions to fix this problem.

“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 also need a better deal for renters so that they don’t get clobbered by soaring rents.

“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. As we’ve seen in recent weeks, problems still persist due to issues like the public sector pay freeze and workers paid below the living wage. ”

NOTES TO EDITORS:

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

Local authority area

Ratio of house prices to earnings, 1997

Ratio of house prices to earnings, 2013

Ribble Valley

3.60

7.76

Trafford

3.75

7.65

West Lancashire

3.40

6.96

Wyre

3.73

6.46

Fylde

2.99

6.06

Stockport

3.51

5.98

Chorley

3.53

5.92

Warrington

3.31

5.77

South Ribble

2.98

5.76

Sefton

3.70

5.62

Rossendale

2.82

5.33

Wirral

3.04

5.21

Tameside

2.84

5.07

Bury

2.98

5.02

Oldham

2.73

5.00

Lancaster

2.69

4.93

St Helens

2.85

4.84

Preston

2.98

4.81

Rochdale

2.59

4.74

Wigan

2.83

4.65

Blackpool

3.04

4.58

Halton

2.92

4.57

Manchester

2.27

4.56

Bolton

2.79

4.54

Salford

2.50

4.27

Liverpool

2.53

4.13

Blackburn with Darwen

2.25

3.96

Knowsley

2.51

3.94

Pendle

2.03

3.87

Hyndburn

2.35

3.50

Burnley

2.01

3.28

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

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