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Rural Homes 'Unaffordable'

Aug 18, 2007
Property is becoming increasingly unaffordable for prospective first-time buyers in rural areas, it has been indicated.

According to figures released by the Commission for Rural Communities for the National Housing Federation (NHF), the average price for a home in the country stood at some 240,222 pounds during 2006. Meanwhile, the typical cost of property in an urban area was 196,700. Findings from the East Midlands branch of the NHF revealed that the average cost of a home in the region is worth 7.2 times the standard income, however this was reported to rise to ten times worth their salary for property in some rural areas. Consequently for a single person to afford secured loan repayments on a standard home in the area, they are said to be having to earn some 41,000 pounds per year.

Gina King, head of region for the NHF, said: "It is sad to note that soaring property prices, coupled with a chronic affordable housing shortage are forcing young people to move away from rural areas. House price inflation has produced increased wealth for many older residents and has undoubtedly helped drive improvements in the local economy, but for local people looking to buy their first home, or on middle incomes the situation has become dire. Many people are stranded between not being able to afford to buy or rent in these largely expensive markets and have no real priority for the little scarce affordable housing that is currently available".

As a result, Ms King claimed that as the rural population is currently older than urban residents in addition to these consumers continuing to experience a higher rate of age growth, the government needs to do more to ensure first-time buyers are able to afford secured loan costs. She added that the provision of affordable property in the country is "urgently needed".

Earlier this month, research carried out by mform indicated that young buyers are increasingly willing to take on higher borrowing in an attempt to get on to the first rung of the property ladder. The company revealed that 2.08 million under-35s are looking to take out a secured loan worth four times their annual pay. Some 828,000 of these Britons were prepared to borrow at five times their amount of their yearly income, with this falling to about a quarter of a million for those seeking six times their income.

Overall, 3.7 million borrowers were said to be looking to get a mortgage worth at least quadruple their annual salary within the next three years, with those aged 34 or under said to account for just over half (56 per cent) of such consumers. Figures from the financial company also indicated that 25 to 34-year-olds see getting on the property ladder as their biggest priority in life. Francis Ghiloni, spokesperson for the online mortgage firm, suggested that as property prices carry on rising and wage growth continues to curb, young consumers are evermore ready to "take on huge debt". These borrowers were also reported to be choosing interest-only mortgages as "they will not be able to afford to repay the capital they have borrowed".
About the Author
Steve Smith writes for 1 Stop Finance Shop, where our visitors have access to all types of finance from payday loans and unsecured tenant loans, to self employed loans for homeowners.
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