Would-be first time buyers face the "hardest struggle ever" to get onto the property ladder in Scotland according to a new report from housing charity Shelter.
The annual ROOF Affordability Index assesses housing affordability
by comparing mortgage costs against household incomes, taking account
of interest rate changes, and highlights the gap between what people
can afford and the growing cost of housing.
The research, published today, says that it is 65% harder for first time buyers to buy a house than ten years ago, and that overall house prices in Scotland for first time buyers have risen almost 180% in ten years.
The Index also shows that in Scotland, while the average weekly income of working households has risen from £548 in 1997 to £851 now (a 55% increase) - the average first time buyer property has rocketed from £38,845 ten years ago to £108,446 at present. Over 15% of the average household's income in
2007 now goes towards mortgage repayment costs, compared with 9% in 1997. The average monthly mortgage repayment is now £563, compared to £219 ten years ago.
"Despite the column inches dedicated recently to a downturn in house prices south of
the border, and a possible slow down in Scotland, this long term comparison shows the real story is that housing is out of the reach of many would-be buyers," said Archie Stoddart, director of Shelter Scotland.
On Tuesday, the Royal Institution of Chartered Surveyors (RICS) reported that Scotland's property market is still holding up compared to the market South of the border where house prices have started dropping. However, although 90% of RICS members said that costs were either rising or staying the same, surveyors reported that new buyer enquiries fell in Scotland last month.
The most recent figures from the Edinburgh Solicitors Property Centre (ESPC) show that the average cost of an Edinburgh property is now £207,669 and that house price inflation in Edinburgh at 1.2% is now not keeping up with general inflation.
"Any fall in prices would be a drop in the ocean," said Stoddart. "The
stark reality for many first time buyers is that as mortgage lenders
tighten their belts in the current financial climate, it will become
increasingly difficult to buy."
Shelter Scotland is holding a summit ‘The Scottish Housing Bubble' to look at the
prospects for the Scottish housing market. Professor Steve Wilcox, who
compiled the ROOF Affordability Index, is one of the experts speaking at the Shelter event on May 22 at the City Chambers Business Centre.