Houses hit eight times pay

PROPERTY prices have soared out of reach for many ordinary workers, according to a report which calls for thousands of cheap homes to be built.

House prices in England have risen to almost eight times the average salary, research for the National Housing Federation shows.

It said that prices have increased by 125% since Labour was elected in 1997. However, incomes have gone up by just 18% in the same period.

The study found that the South West is the country's most unaffordable area, with house prices at 9.5 times average salaries in the region.

It carries an implied criticism of the right-to-buy reforms introduced under Margaret Thatcher which allowed council house tenants to buy their homes at a massive discount. The study says that successive Governments have failed to build a sufficient number of cheap homes to rent or buy to replace those sold under the scheme.

Some 67,672 such homes were sold last year, which is more than three times the number of new affordable homes built, according to the study.

A recent MORI survey carried out for the Federation, which represents 1,400 independent, not-for-profit housing associations in England, shows that 71% of people agree that buying a home today means taking on too much debt.

The federation's director of strategy, Liz Atkins, said: 'The property market may be cooling, but for thousands of people it's too little too late. Home ownership is now well beyond the reach of many moderate earners, including dual-income families. The problem is compounded by a national shortage of affordable homes.

'Not-for-profit housing associations are doing their best to reverse the crisis, but currently they aren't able to build enough to meet local needs. Meanwhile, homes are constantly being lost to the affordable housing sector through the right-to-buy.

'Increases in house prices and private sector rents are having a disastrous effect on local communities. People are unable to find housing in the area where they grew up. Parents are forced to work longer hours and travel greater distances. Low-income households are forced to live in poor quality, cramped conditions.

'Yet in many parts of the country there is opposition to new building, due to the mistaken assumption that it means concreting over green fields. The evidence is clear. If we want to keep families and communities together and revitalise our towns, cities and villages, we need to build more affordable homes for rent and low-cost ownership.'