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House prices rise at twice rate of earnings

Fears of an affordability crisis are likely to grow as new figures show property prices increasing at twice the pace of earnings.

Prices rose 5.5% over the last year, more than double annual salary growth of just 2.1%.

The average house price in England and Wales leapt by nearly £700 in January to break the £290,000 barrier.


Bournemouth saw the biggest monthly boost of 2.9%, equivalent to an average price hike of £7,371, driven by more technology jobs in the city.

Strongest sales surge found in the North West, up 8.8% year-on-year as buyers seek more property for their money

Adrian Gill, director of Reeds Rains and Your Move estate agents, which produced the figures, said existing homeowners have seen a positive start to 2016. 

“While the 0.2% monthly rise may seem small, we’ve now broken through the £290,000 barrier in average home values across England and Wales.”

Gill said average prices crossed the £280,000 mark last June. “But we have to go back to August 2014 for the crossing of the £270,000 threshold. We’re now passing these milestones in quicker and quicker succession, as prices pick up pace.”

This is making life tougher for those looking to get a foothold on the property ladder as earnings fail to keep pace.

Gill said: “However, aspiring buyers now have much more support with the launch of the Help to Buy ISA in December and the new Starter Homes scheme this year.

“But in the long-term there has to be a huge breakthrough in housebuilding if we’re going meet the growing demand for homes and keep house price growth sensible.”


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