Londoners will have to more than double their annual salary to keep up with spiralling house prices, claims new research from charity Shelter.
In Hackney, salaries would need to increase by over £100,000 to be in line with the rising cost of housing. This follows Land Registry figures that were released last week, indicating the average house price in Hackney had broken through the half a million pound mark, compared to the national average of £176,500.
In Lewisham and Tower Hamlets, the gap between house prices and average incomes was around £54,000 and £50,000 respectively. In Croydon the disparity stood at £32,000.
These figures indicate how Londoners, and particularly young people trying to get on the property ladder, are being priced out of the housing market.
Shelter’s Chief Executive Campbell Robb said: “It is no surprise that the dream of a home of their own is slipping further out of reach for a generation.”
Robb called on the Government to commit to developing and building more affordable housing as opposed to investing in mortgage guarantee schemes. Robb said the latter only serve to inflate house prices and increase demand on an already limited number of homes.
A spokesman from Hackney Council defended the borough’s housing record: “Hackney has delivered the third highest number of new council and housing association homes built anywhere in the country since 2011, with 2,299, and the second highest number of new additions across all tenures, with 9,195.”
The spokesman added: “Hackney Council is also the first local authority to both build and manage its own shared ownership homes, with 20 newly-built in Homerton.” He indicated that the “prices start at £170,000 for a one-bedroom flat, with savings needed of £6,800 for a 25 per cent share”.
The rocketing house prices in east London have been partly attributed to the London 2012 Olympics, as well as an influx of young middle class professionals.
Dave Smith, Project Director at East London Community Land Trusts (ELCLT), a non-profit organisation which focuses on delivering permanently affordable housing, said: “The London housing market is quickly becoming a reserve currency for the global elite.”
“Homes are no longer built as places to live or raise a family, but rather as a commodity to invest in, with ‘affordable housing’ seen by many developers as an annoying distraction to be minimised.”
Smith echoed Shelter’s view on the need to build more homes but to ensure they “are linked to local earnings and made available to local people as a matter of priority”, instead of being tied to the open market rate.
Regarding the plight of young people trying to get on the property ladder, Smith called it “one of the most depressing things about the housing crisis”.
He added that “young people can only get on the ladder if their parents give them a significant amount of money or die… What does that do for social mobility? We are becoming a nation whereby access to our most vital need – decent shelter – is determined by inheritance and has nothing to do with our own young people’s hard work.”