UK residential property has seldom been this cheap – The Property Chronicle
Select your region of interest:

Real estate, alternative real assets and other diversions

UK residential property has seldom been this cheap Low interest rates mean keeping up with mortgages is easier: but does this make home ownership a safe option?

Investor's Notebook

Stacks of pennies

Much is being said and written about the lack of affordable housing in the UK. Since the trough in the first quarter of 2009 following the financial crisis, the average UK house price has risen by 40%. To buy a home in London, young first time buyers need to save for enormous deposits and borrow eye-watering multiples of their salaries. So homes are unaffordable to most first time buyers, right? Wrong.

I left university and started work at around the time of the first Thatcher election victory in 1979. So how has property affordability changed over that 38 year period? See if you can remember that far back and have a stab at these:

  • 1979 election date?
  • Average UK income?
  • Average UK house price?
  • Interest rate?

Answers: May 3rd, £6,281, £19,075, 13%

So, if in May 1979 a first time buyer on average earnings bought an average priced house, borrowing 70% at bank rate? 27.6% of his or her gross salary would have been required just to service the interest, before any capital repayments. Now let’s look at 2017:

  • 2017 election date?
  • Average income?
  • Average house price?
  • Interest rate?

Answers: June 8th, £26,312, £209,971, 0.25%

Investor's Notebook The Fund Manager

About Jo Welman

Jo Welman

Jo Welman is an adviser to Epic Private Equity and the Non-Executive Director for ARK Syndicate Management Ltd, as well as advising several small companies and individuals on the structure and allocation of their investments. His previous roles have included managing balanced portfolios at Barings, Managing Director at Rea Brothers (Investment Management) Ltd, and Executive Chairman at Brit Insurance Holdings Plc.

Articles by Jo Welman

Subscribe to our magazine now!