Price-to-Income Ratio for a U.K. Home Purchase Expanded in 2017Terohan Nula April 17, 2018 0 COMMENTS
Britons who searched for house listings in 2017 may have noticed higher prices that dwarf their available income, as the price-to-income ratio for an average home purchase reached its highest point since 2007.
A typical house for sale last year required a buyer to pay seven times their average annual salary, according to a Lloyds Bank Affordable Cities Review study.
Home Purchase Taxes
First-time buyers should use a stamp duty land tax calculator before they plan to look for a house since the government decided to reduce taxes for housing transactions among them.
The move has begun to pay off, since stamp duty collections on housing deals amounted to more than £2.54 billion in the last quarter of 2017, according to Her Majesty’s Revenue and Customs (HMRC).
Affordable Housing Crisis
The broader gap in the price-to-income ratio indicated a growing affordable housing problem. In the last five years, home prices in the country have risen by 36%, but average salaries in the city have increased only 9% to more than £33,000.
As of November 2017, the average national home price amounted to more than £226,000, according to the Office for National Statistics.
Houses for sales in Northern Ireland posted the biggest growth at 6% to more than £132,000 year over year. In London, prices dropped 10.9% yet the average price remained expensive at slightly above £729,000.
The U.K. government noticed the trend of steep housing prices, which led it to consider implementing stamp duty cuts.
The full impact of the stamp duty cuts will likely manifest in the next several months since a market slowdown occurred in the latter part of 2017.
Home prices in the U.K. remain expensive, so buyers need to be aware of any extra fees before they intend to place a bid on a property for sale.