Monday 10 February 2014 8:57 pm

Wages left far behind as house prices rocket

THE AVERAGE salary in England would have grown by £29,000 in the past decade and a half if wages kept up with house price inflation, according to shocking new figures. Research by housing charity Shelter shows that average earnings would have been over £55,000, rather than just below £26,000, if pay had risen at the same rate as house price growth between 1997 and 2012. In some parts of the country pay would have had to more than triple to keep up with rampant house price inflation: in Westminster, typical earnings would have risen to £146,569, rather than £41,194. Earnings would need to have grown by more than £50,000 in the period in 17 local areas, 16 of which are in London. “Despite the fanfare surrounding Help to Buy, pumping money into mortgage guarantee schemes is not the solution. This further inflates prices by increasing demand for an already limited number of homes,” said Campbell Robb, chief executive of Shelter. The gap is narrowest where demand for housing is low – in Burnley, pay would have had to rise by only £10,000 to keep up with much more modest increases in house prices. Further research from Castle Trust suggests that 4.1m people in the UK have now given up on owning their own home, with house prices for first time buyers increasing by 480 per cent over the past three decades. “The failure of the young to break into the housing market has some very serious social implications,” said Castle Trust’s Sean Oldfield. The group also found that 53 per cent of prospective home owners say that they intend to raise their deposits with savings accounts, despite the poor rate of return when compared to rising property prices.