The gap between house prices and incomes has grown by 60% over the past 35 years, driving home ownership further and further away for first-time buyers, as reported by The Herald in an article by Alan MacDermid published on their website.
It means that in the most expensive area, London, buyers may have to pay 4.4 times their annual salary to get on the property ladder, says Alliance Trust, the Dundee-based investment house. The biggest surge was between 2000 and 2004, when average house prices leapt from £125,000 to £200,000, with little by way of a jump in wage inflation. Scottish househunters are better-placed than the rest of the UK - thanks to lower house prices - leaving them to find 3.2 times their salary, compared with 2.4 in 1990.
Shona Dobbie, head of the Alliance Trust Research Centre, warned that the struggle to fund a roof over their heads will leave many buyers short of pension funding in later years: "These figures clearly show it is becoming harder for first-time buyers to break into the housing market. In recent years, buy-to-let investors have taken on the traditional role of first-time buyers in keeping the market going but you really need first-time buyers to sustain prices over the longer term. There are knock-on effects from the pressure on first-time buyers, such as the time now needed to build up a larger deposit. With so much time now being spent focusing on saving for a house and paying it off, people are putting off retirement saving for even longer."
