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Priced out of the market

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New figures reveal that high house prices coupled with low wages make Northumberland the most unaffordable place to live in the north east.

Data published by the TUC shows that homes across the county are now out of reach for many local people.

Last year, the average house price was almost six times the local average salary.

There are no local authority areas left in the north east where local house prices are less than four times the average local salary.

The TUC analysis of average (median) salaries and house prices by local authority area shows that in 1997 the average house price in every area of the north east was less than four times the average salary. By 2013 not a single area had this level of affordability.

Nearly half the areas across the region are now out of reach for many local people, with house prices at least five times the average wage.

The affordability ratio of five is particularly significant, says the TUC, as the Bank of England has recently instructed banks to limit the proportion of mortgages they offer that are more than 4.5 times applicants’ salaries.

The TUC believes that the combination of soaring house prices, stagnating pay in the run-up to the crash and the longest real wage squeeze in over a century will leave house prices more out of reach than ever before.

TUC Regional Secretary Beth Farhat said: “Over the last 16 years, house price rises have outstripped peoples’ pay packets and left huge swathes of the region unaffordable. Unfortunately, the situation is compounded because our region has the highest unemployment rate and the lowest wages in the country.

“We need to build more homes to get house prices back under control. With interest rates low, now is the perfect time for an ambitious programme of home-building, which would also help tackle local unemployment problems.

“But as more people give up on buying a home or decide they don’t want to get on the housing ladder, we also need a better deal for renters so that they don’t get clobbered by soaring rents.”

 

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