You probably don’t need telling that house prices have risen faster than wages in recent years. But you may be astonished to discover how much faster.
Over the past year, the average UK property has risen 12%. Wages climbed a meagre 0.6%.
The average house took home £29,339 over the year, some £2,000 more than the average UK worker, who earned £27,271 before tax.
In practice, that means your home may earn more than you.
Workhouse
Properties not only earned more than three out of five workers, they also enjoyed a vastly bigger pay rise. As house price growth picked up, the average home returned £20,000 more than one year earlier, while wages increased by just £169.
Unsurprisingly, London homes were the real fatcats, earning £80,000 in the last year, nearly twice as much as the average salary in the capital.
Happy At Home
These ridiculous figures, which appear in the Post Office’s Cost of Buying & Moving study, show just how distorted our housing market has become.
Bricks and mortar earned more than the starting salary of a junior hospital doctor (£22,636), graduate nurse (£21,388), teacher (£22,023), police officer (£23,317) and soldier (£17,945).
And unlike these hard-working professionals, they didn’t even have to leave the house.
Falling Behind
These figures will be especially disheartening if you’re scrambling to save for a deposit to buy a property. Over the last year, you’ve fallen even further behind.
No wonder the number of first-time buyers has fallen almost 30% in the last three months, according to new research from e.surv.
And those that are making the stretch our borrowing ever larger sums to do so.
Some homeowners might feel smug, although I suspect most won’t. Climbing the property ladder is harder than ever, as the next rung of the ladder gets further away.
More than four million young homeowners are stuck in their first home, according to Santander Mortgages, partly because they can’t afford to make the leap to somewhere nicer.
When houses earn more than workers, even homeowners suffer in the end.
Bubble Trouble
House prices can’t keep rising 20 times faster than wages forever. New buyers should resist the temptation to chase prices higher, especially with the Bank of England set to hike interest rates next year.
Your home won’t be the main breadwinner forever. Forecasts suggest it is in line for a 0.8% pay cut next year, and about time too. Because if your home earns more than you do, what’s the point of working at all?
